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Old 13.01.2012, 10:19
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Re: Value-adding home inprovement after purchase

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That's quite clear, in general terms. But what if you bought a house "as is" with a broken kitchen? Is replacing it then considered adding to the value of the house (for the purpose of gain tax reduction), or simple maintenance? And who decides that?

Actually, is it just one thing: "house value" or two separate things being tracked by the officials: 1) value as part of your capital base, insurance, etc. and 2) amount you spent on the house that gets deducted from the resale amount to figure out the gain tax?

Thanks everybody for the bits of info. The picture so far: one can either apply renovation expenses to "maintenance" or toward upping the house value but that needs to be approved by... who? the Bauamt, the tax office?
To me redoing a 20 yr old kitchen is maintenance and not increasing the value of the house. Increasing the value is done by adding rooms/bathrooms/adding a pool, etc. Replacing a kitchen like for like is maintenance. Everything you mention, paint, carpet, etc. is all maintenance.

I don't understand why you are want so much to increase the value of the house. It may save you a bit of money on CG but it will bite you and the new buyer in the butt for a bunch of other taxes.
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Old 13.01.2012, 10:26
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Re: Value-adding home inprovement after purchase

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Are you sure this is true? Perhaps it's different for each canton but I've heard that stuff you do to upgrade a property which would increase it's value is also deductable against your income tax in the year you have the work done. I have one friend who spent hundreds of thousands on their renovation a few years back and basically paid no income tax for that year.
Renovation is maintanance. If you buy BELOW market value because work is required - fixing it will come out of your income tax. Potentially though - you may end up with a larger CGT bill when you come to sell -unless you reinvest.

Swings and roundabouts. You are best advised looking at the specific tax rates for your kanton and working back from there.
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Old 13.01.2012, 11:25
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Re: Value-adding home inprovement after purchase

heck, the sweetest deal would be if we could claim the expenses for income tax reduction this year and also later if we resell, to reduce the CG tax
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Old 13.01.2012, 14:49
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Re: Value-adding home inprovement after purchase

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Calling fatmanfilms or AbFab or one of the other taxophiles?
Sorry it's not an area where I have any first hand knowledge.
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Old 13.01.2012, 15:33
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Re: Value-adding home inprovement after purchase

You can't claim the same thing twice.

You need to look at how long you are likely to keep the property - and the tax benefit from either deducting against income - or deducting against CGT.

I'd wager most people would be better deducting from income rather than as a capital improvement.

2012 deductions for me will include - replacement of woodstore!!
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Old 17.01.2012, 18:28
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Re: Value-adding home inprovement after purchase

OK, so generally replacing a kitchen is maintenance. But what if the new kitchen has pricier parts ("golden taps", or in our case a high-end granite top instead of the old particle board top, among other things) - do we split the cost in two parts: maintenance (like-for-like replacement) and "golden taps" and declare them separately?

And how do I show them what was there before - photos?

Last edited by jimk; 17.01.2012 at 19:00.
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Old 17.01.2012, 19:32
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Re: Value-adding home inprovement after purchase

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OK, so generally replacing a kitchen is maintenance. But what if the new kitchen has pricier parts ("golden taps", or in our case a high-end granite top instead of the old particle board top, among other things) - do we split the cost in two parts: maintenance (like-for-like replacement) and "golden taps" and declare them separately?

And how do I show them what was there before - photos?
I don't think you can claim for golden taps. If you want to upgrade that's on you. But you can only deduct like for like. Or at least that is how I understand it.
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