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Old 08.08.2016, 22:29
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Can one sell a mortgaged house?

Hi,
Can one sell a house which they have bough with Bank mortgages? If no, is there a minimum time window to wait before being able to sell the property? Will they loose anything? What are the rules?
Thanks
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Old 08.08.2016, 22:33
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Re: Can one sell a mortgaged house?

Of course you can.

The question is, can you sell it without losing money?

Tom
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Old 08.08.2016, 23:30
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Re: Can one sell a mortgaged house?

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Hi,
Can one sell a house which they have bough with Bank mortgages? If no, is there a minimum time window to wait before being able to sell the property? Will they loose anything? What are the rules?
Thanks
If you have a fixed mortgage you may have to pay all the interest until the end of the fix, unless the buyer wants to take it over, which is not unheard of. If your rate is a bad deal you will need to compensate the buyer, but probably cheaper than paying off the bank.
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Old 09.08.2016, 08:56
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Re: Can one sell a mortgaged house?

Tangential to your question, but something to be aware of nonetheless:

You might also face a tax penalty added to capital gains if you sell a house within a short time. This is sort of an anti-speculation tax, if you will, applicable in IIRC most cantons.

Each canton sets the amount of penalty and the time frame for which it runs. For instance, in my canton of SZ, sale of the property in the first year means a penalty of 40% increase in the Grunstuckgewinnsteuer. That penalty (Besitzdauerzuschlag) reduces every year until it falls away at 5 years when you pay only the normal capital gains tax rate.

But do be mindful that the concept and implementation may differ in each canton.

(Of course, if one sells within a short time there may well be no profit at all, as Swiss properties tend to appreciate slowly. In which case, you have other worries than the Besitzdauerzuschlag.)

So in addition to mortage issues, do research tax implications if you sell within a short time.
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Old 09.08.2016, 09:09
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Re: Can one sell a mortgaged house?

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Tangential to your question, but something to be aware of nonetheless:

You might also face a tax penalty added to capital gains if you sell a house within a short time. This is sort of an anti-speculation tax, if you will, applicable in IIRC most cantons.

Each canton sets the amount of penalty and the time frame for which it runs. For instance, in my canton of SZ, sale of the property in the first year means a penalty of 40% increase in the Grunstuckgewinnsteuer. That penalty (Besitzdauerzuschlag) reduces every year until it falls away at 5 years when you pay only the normal capital gains tax rate.

But do be mindful that the concept and implementation may differ in each canton.

(Of course, if one sells within a short time there may well be no profit at all, as Swiss properties tend to appreciate slowly. In which case, you have other worries than the Besitzdauerzuschlag.)

So in addition to mortage issues, do research tax implications if you sell within a short time.
Which, if you buy another house within 1 year, the tax gets refunded...
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Old 09.08.2016, 09:41
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Re: Can one sell a mortgaged house?

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Which, if you buy another house within 1 year, the tax gets refunded...
The tax liability has not vanished, it's just been rolled over...........
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Old 09.08.2016, 10:25
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Re: Can one sell a mortgaged house?

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Which, if you buy another house within 1 year, the tax gets refunded...


It gets deferred if you buy another house within 5 years in Zurich, I think. If you continue to sell and buy, you don't have to pay ... until you sell your final house and don't buy anymore. If you sell and leave the country, you have to pay it immediately.




As for your mortgage, if you buy another house, it can be transfered to the new house without any penalty. If you decide to change banks, then it is similar to the penalty you pay if you were to refinance your current house. at a different bank.
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Old 09.08.2016, 10:27
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Re: Can one sell a mortgaged house?

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The tax liability has not vanished, it's just been rolled over...........
Not quite true old chap, if you keep the next house for a long enough period the tax is not levied at all, therefore it effectively vanishes !
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Old 09.08.2016, 10:38
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Re: Can one sell a mortgaged house?

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Not quite true old chap, if you keep the next house for a long enough period the tax is not levied at all, therefore it effectively vanishes !
That time scale being up to 25 years, so a liability all the same even if it does not crystallise.
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Old 09.08.2016, 10:41
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Re: Can one sell a mortgaged house?

Remember also to deduct for capital improvements (keep receipts) and selling costs - including legal costs.
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Old 09.08.2016, 17:50
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Re: Can one sell a mortgaged house?

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That time scale being up to 25 years, so a liability all the same even if it does not crystallise.

I agree it is a Cantonal issue but where Meloncollie lives, she says it is 5 years, which is a bit different than 25 years....

My point remains, the tax can vanish depending on circumstances rather that your statement that is it simply rolled over. It is reduced each year but the amount is governed by Cantonal law.
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Old 09.08.2016, 18:56
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Re: Can one sell a mortgaged house?

I gave you the Readers Digest Condensed version above - a fuller explanation:

In SZ, CGT on property is progressive, ranging from 8% on the first 3000 to 30% for gains over 40,000. That is the base rate.

Additionally there is a penalty, the Besitzdauerzuschalg above, that increases the CGT rate, starting at 40% added to the base if the property is sold in the first year. The penalty then decreases by 10% with each year of ownership until the penalty falls away at 5 years. At that point you only pay the regular Grundstückgewinnsteuer rate.

From 5 years on, there is a 'bonus', a reduction to the CGT. I can't find the table anymore, but the 'bonus' slowly increases (that is, reduces the CGT rate) until after 25 years of ownership the CGT base rate is reduced IIRC by something like 70%.

This assumes that you don't roll over to another property. I have no idea how that works, haven't looked into it as it is unlikely I will buy again in Switzerland. And, in all likelihood I will not sell this place for much of a profit so ever since the Ausserschwyz bubble deflated CGT really has dropped off my 'worry radar'.

But it sounds as if the OP was intending to leave Switzerland - in which case he really should research the tax implications of short term ownership as he assesses the cost of buying.

And again, each canton does it's own thing.

Here's a summary from 2014; of course one should check for revisions to each canton's practices in the intervening years.

Cantons A-L
http://www.weka.ch/themen/steuern/im...r-kantone-a-l/

Cantons N-Z
http://www.weka.ch/themen/steuern/im...r-kantone-n-z/
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