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  #21  
Old 07.05.2011, 17:22
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Re: renting vs buying - what would you do?

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The American in me makes me want to own my own place...
As Americans we're conditioned to believe that renting is either a temporary place while transitioning between homes, or it is something that only people without money have to do to keep a roof over their head. (just think of all the high rise condos that are better suited to be apartments). We're also taught that owning is better than renting because you "aren't throwing your money away", "it's an investment", and "a tax write-off".

But what do you want to own for? The tax write-off is a non-sequitor in Switzerland.
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  #22  
Old 07.05.2011, 17:56
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Re: renting vs buying - what would you do?

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If we end up coming, I will have to see what options there are for that. However, as we are a family with 3 young children, I suspect our options are much more limited. Or at least it becomes quite difficult.
Absolutely. If you've your heart set on one specific community, then find the ideal house may be impossible. There simply isn't a market in most places.

Why buy? You don't have to clean up when you leave, you don't need the landlords permission to paint the walls, you don't have to wait an age for him to get round to refurbishing, you won't get evicted if he decides to knock it down, or give it to his offspring, the mortgage and maintenance payments (and notional rent) may be less than you'd pay in actual rent for the same house. Lot's of reasons. Many of which were reasons I bought a house in the UK. Tax savings and investment were on the list, but weren't the only items.
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Old 07.05.2011, 18:01
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Re: renting vs buying - what would you do?

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Meaning it's lower/in your favour still?
In our favor. And if you structure your mortgage with tax implications in mind, you can pretty much offset the Eigenmietwert by the mortage deduction.

(I think the phase of the moon was looking kindly on us that day, as I've heard neighbors grumbling. Of course, it could just be that their houses are nicer than ours. As with everything in Switzerland, YMMV.)

---

Some years ago there was a referendum to abolish Eigenmietwert along with deductions relating to property ownership, and it was voted down. I thought a new initiative was afoot to try it again - anybody know what has happened with that?
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Old 07.05.2011, 18:02
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Re: renting vs buying - what would you do?

Rumblings still going on - but nothing actually happening. No doubt it would be replace but a form of UK style rates- which could be much more expensive.
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  #25  
Old 07.05.2011, 18:13
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Re: renting vs buying - what would you do?

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but then realise they cannot raise the 20% 'cash' and that by Law they can only get an 80% mortgage.
In some places round Horgen/Zurich 90% mortgages are possible. Plus, you can often transfer previous years of your overseas pension contributions gross to Switzerland and use those as the 10% deposit. So you might be looking at say just 6% (advance pension tax) of the gross 10% deposit, plus transaction costs if you are lucky.

I have a house with 3 apartments 15 minutes (according to google maps) from Horgen. I could possibly rent 2 for a fixed period, no deposit, but cash up front for an agreed period you want, say 2 or 3 months. I'm looking to sell the place really, so don't want long term tenants in there. It is in a nice quiet area, close to shops and rail. PM me if you are interested.
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Old 09.05.2011, 16:38
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Re: renting vs buying - what would you do?

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(Americans take note: you will also have a foreign exchange transaction to deal with. I am now in the delightful position of having bought the house when USD/CHF was 1.4-ish, and am now selling at .85 - meaning that even if I sell my house for no profit or even a loss, I am still looking at a very painful US tax bill.)


That said, for us it has worked out to be a better financial decision to buy rather than rent, as we bought before the bubble, and so traded silly expat rent for a very low mortgage. By the way, putting 33%+ down will in many cases bring your rates down significantly as well.
Very good post Meloncollie but had a few questions :

What does silly expat rent mean ?

Are'nt exchange rate losses taken into account by the tax guys in the US ?

Last edited by Guest; 09.05.2011 at 21:42. Reason: Fixed quote formatting
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Old 09.05.2011, 16:43
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Re: renting vs buying - what would you do?

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Absolutely. If you've your heart set on one specific community, then find the ideal house may be impossible. There simply isn't a market in most places.

Why buy? You don't have to clean up when you leave, you don't need the landlords permission to paint the walls, you don't have to wait an age for him to get round to refurbishing, you won't get evicted if he decides to knock it down, or give it to his offspring, the mortgage and maintenance payments (and notional rent) may be less than you'd pay in actual rent for the same house. Lot's of reasons. Many of which were reasons I bought a house in the UK. Tax savings and investment were on the list, but weren't the only items.
There are a lot of 'why rent' reasons too no ?
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  #28  
Old 09.05.2011, 16:54
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Re: renting vs buying - what would you do?

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<snip>...Of course, haven't been there personally yet, <snip>
First, do not buy anything until you know the country, know the area you are buying in, know the neighborhood - and the neighbors.
Bingo - just to re-emphasise the point...

Exactly why you should rent first, at least 12 months to get a feel for where you are going to live. CH, as EFers will attest to, is a special place...

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Most cantons impose a penalty on the sale of a property if it has not been held a certain number of years, generally 5 but in some cantons much longer than that. <snip>
There are exceptions, e.g. if you leave the country or have to move location due to your job... If you are moving just for profit, expect the tax may to take a big cut (i.e. all) of the profits.

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How is the notional rent calculated/discovered?
Using a complex series of analysis, combined with a tool like this:
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  #29  
Old 09.05.2011, 17:05
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Re: renting vs buying - what would you do?

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What does silly expat rent mean ?
'Silly expat rent' is what one pays when one arrives with two dogs, no German, no understanding of the market, and has only a few days to find a place to live. The company-provided relo agent showed us three places, said this was it, nothing else on the market - choose one. We ended up paying well over the odds for the run down little house we ultimately chose - but at least we had a roof over our heads, a garden for the mutts, and relatively little hassle.

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Are'nt exchange rate losses taken into account by the tax guys in the US ?
As I understand it - and please, someone correct me if I'm wrong, I'd really like to be wrong in this case - the US sees a gain even where there isn't one in CHF, due to the exchange rate. Capital gains is figured on the price of the home converted to USD on the day we bought against the price of the home converted to USD on the day we sell. If we sell the house now, the tanking dollar against the strong Swiss frank would make it look like we made a handsome profit - when in reality that is unlikely to be the case.

But please don't take my word for it - consult a professional. Which is what I should be doing, rather than relying on Maalox to quell the ulcer this whole episode is creating...

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  #30  
Old 09.05.2011, 17:57
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Re: renting vs buying - what would you do?

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'Silly expat rent' is what one pays when one arrives with two dogs, no German, no understanding of the market, and has only a few days to find a place to live. The company-provided relo agent showed us three places, said this was it, nothing else on the market - choose one. We ended up paying well over the odds for the run down little house we ultimately chose - but at least we had a roof over our heads, a garden for the mutts, and relatively little hassle.



As I understand it - and please, someone correct me if I'm wrong, I'd really like to be wrong in this case - the US sees a gain even where there isn't one in CHF, due to the exchange rate. Capital gains is figured on the price of the home converted to USD on the day we bought against the price of the home converted to USD on the day we sell. If we sell the house now, the tanking dollar against the strong Swiss frank would make it look like we made a handsome profit - when in reality that is unlikely to be the case.

But please don't take my word for it - consult a professional. Which is what I should be doing, rather than relying on Maalox to quell the ulcer this whole episode is creating...
Indeed a tough one. Wonder why the US tax authorities are interested at all in your house dealing here when you are non resident in the US.

Silly expat rent..I see your point. Any range you could provide above which the rent is silly ?
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Old 09.05.2011, 18:03
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Re: renting vs buying - what would you do?

The market is stacked against the rentor- huge demand and hardly any supply- and the Agencies are playing the system in their favour. If you are not happy with the cost, there are plenty behind you who are prepared to pay 'silly expat' rents. If you think it's bad, I can assure you it is much worse for the locals who are not on 'silly expat salaries' - which is creating much tension, sadly.
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Old 09.05.2011, 18:04
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Re: renting vs buying - what would you do?

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The market is stacked against the rentor- huge demand and hardly any supply- and the Agencies are playing the system in their favour. If you are not happy with the cost, there are plenty behind you who are prepared to pay 'silly expat' rents. If you think it's bad, I can assure you it is much worse for the locals who are not on 'silly expat salaries' - which is creating much tension, sadly.
so then who are these people who get these silly expat salaries ?
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Old 09.05.2011, 18:16
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Re: renting vs buying - what would you do?

I don't know how anyone figures a 620k mortgage coming in at 2'800 a month. It'd be more like a quarter of that (just interest).

Dodge tax by amortizing on your 3a.

The "rentable value" is easy to game, your interest and claimed maintenance allowance takes care of this.

I own two properties and pay around 3k a month for both including amortization. I anticipate paying little to no tax this year due to certain criteria
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Old 09.05.2011, 18:33
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Re: renting vs buying - what would you do?

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I don't know how anyone figures a 620k mortgage coming in at 2'800 a month. It'd be more like a quarter of that (just interest).

Dodge tax by amortizing on your 3a.

The "rentable value" is easy to game, your interest and claimed maintenance allowance takes care of this.

I own two properties and pay around 3k a month for both including amortization. I anticipate paying little to no tax this year due to certain criteria
hmm, we need to learn a few things from you then.
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  #35  
Old 09.05.2011, 19:16
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Re: renting vs buying - what would you do?

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I don't know how anyone figures a 620k mortgage coming in at 2'800 a month. It'd be more like a quarter of that (just interest).

Dodge tax by amortizing on your 3a.

The "rentable value" is easy to game, your interest and claimed maintenance allowance takes care of this.

I own two properties and pay around 3k a month for both including amortization. I anticipate paying little to no tax this year due to certain criteria
I agree with what danny says - perhaps you could run a seminar on how to do this

The 2800 was (I think) an all in what the house would cost including running costs, not just the cost of the mortgage. I am just trying to get an idea of what we can afford should it come up.

I appreciate the idea of living somewhere for a year first and then figuring out where you want to be, but with 2 kids who will be in the school system, and us just moving 2 years ago from the US to Germany, I couldn't imagine another move in such a short space of time. Ah, how simple life was before those kiddos invaded!
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Old 09.05.2011, 19:51
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Re: renting vs buying - what would you do?

When you do your costing, remember you'll need 20% cash in most circumstances. Must say I've never heard of a 90% mortgage in CH.
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Old 09.05.2011, 20:02
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Re: renting vs buying - what would you do?

Do you have dogs/cats as well as kids?
Just kids is a lot easier.
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Old 09.05.2011, 20:18
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Re: renting vs buying - what would you do?

Of course buying is much easier if you have pets.
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Old 09.05.2011, 20:24
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Re: renting vs buying - what would you do?

About "owning your own place" - if you buy a flat, you may still have the rule book to stick to. For instance, the place I'm moving into belongs to my dad and you'd THINK you can do what you like, but you can't. So my balcony railings have to be the exact ones like everyone else has, my front door has to be exactly like everyone else has outside, no keeping stuff like shoe cabinets in front of the flat and if the owners' committee decides no bbqs on the balcony, well, there will be no bbqs out there.

And you can also go mad decorating in rented flats - you just have to be able to replicate the original state when you move out. As for the "keeping up with the Joneses" aspect, well, some of the nicest properties are for rent only, a seriously loaded friend of mine rents his place but it includes direct access to lake Zurich - in Zollikon (one of the most fancy places to live).

But I agree with the others, don't buy until you know exactly what you want. Otherwise you might end up like someone I know who bought something, didn't like the area after all and is now back in rented accommodation, renting out the property they bought.
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Old 09.05.2011, 20:54
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Re: renting vs buying - what would you do?

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who are these people who get these silly expat salaries ?
Silly expats of course, silly.
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