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Old 17.05.2019, 14:16
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Holiday Apartment Purchase

Hi All

We are looking to purchase a holiday apartment for our own use in Switzerland (not to be rented out) and we are UK residents. We have been in touch with the local Gemeinde and the local Regierungsstatthalteramt with regards to permissions, restrictions and taxes.

We are aware we will need to pay the Nebenkosten, Liegenschaftssteuer, Schwellentelle and Kurtaxen along with any utility bills (electric, water) and house insurance.

We are also aware we would need things like the Universal License for TV / Radio. Is there anything else we need to be aware of or need to consider?

Any information would be much appreciated.
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Old 17.05.2019, 14:33
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Re: Holiday Apartment Purchase

Are you paying cash or using a mortgage?


Swiss banks may be particular about mortgages so make sure to read the small print. For example if the appartment depreciates in value they may require that you repay part of the mortgage to protect their risk exposure.


Also make sure that your bank actually allows you to have an account as a non Swiss / non resident. I understand some banks are a bit difficult in that department. You will probably need an account to pay the various bills by direct debit.
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Old 17.05.2019, 14:57
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Re: Holiday Apartment Purchase

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Are you paying cash or using a mortgage?


Swiss banks may be particular about mortgages so make sure to read the small print. For example if the appartment depreciates in value they may require that you repay part of the mortgage to protect their risk exposure.


Also make sure that your bank actually allows you to have an account as a non Swiss / non resident. I understand some banks are a bit difficult in that department. You will probably need an account to pay the various bills by direct debit.
Thanks for the response. It would be a cash purchase, no mortgage involved.

We would assume a bank account would be needed for the bills. I had a quick look and I think most of the larger banks should be fine with us.
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Old 17.05.2019, 16:32
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Re: Holiday Apartment Purchase

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Thanks for the response. It would be a cash purchase, no mortgage involved.

We would assume a bank account would be needed for the bills. I had a quick look and I think most of the larger banks should be fine with us.



Why ? Use Revolut, far more economical for your situation
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Old 17.05.2019, 16:41
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Re: Holiday Apartment Purchase

You should be aware of capital gains tax (Grundstuckgeweinsteuer) on property sales when that time comes and if there's a profit...
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Old 17.05.2019, 16:46
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Re: Holiday Apartment Purchase

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Why ? Use Revolut, far more economical for your situation
Would that work for paying monthly bills? I would have assumed you would need to pay by direct debit from a bank account.
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Old 18.05.2019, 22:06
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Re: Holiday Apartment Purchase

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Would that work for paying monthly bills? I would have assumed you would need to pay by direct debit from a bank account.
I don't think we pay any of our utility bills by DD. The bill comes (in the post or electronically), we pay it online.

DD do exist in Switzerland - our health insurance is on one so the co-pay can be collected automatically, just doesn't seem to be a typical way to manage utilities.

Check what the Nebenkosten includes - often water and electricity are in there, with an annual "true-up" of actual bills vs the monthly / quarterly NK payments.

Other costs:
1) medical coverage: make sure you have travel insurance appropriate for the amount of time / frequency you plan to be in CH. And if you will be in the mountains for hiking / winter sports, take out REGA membership (they'll send a medical helicopter as needed to scrape you up after an accident ....bargain at CHF 30 per year for a adult, CHF 70 for a family)

2) will you drive here? or arrive by plane / train? might be worth getting a Halbtax if using trains a lot. It's an annual card at around CHF 180 giving zou 50% off public transport fares
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Old 19.05.2019, 09:06
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Re: Holiday Apartment Purchase

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Would that work for paying monthly bills? I would have assumed you would need to pay by direct debit from a bank account.



The only obligation you have is to pay the bill, how you do it is up to you, sure DD is easiest but you can also pay by a simple bank transfer if you want to.
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Old 20.06.2019, 09:56
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Re: Holiday Apartment Purchase

Just for information, I ran through an cost exercise for a client recently so I thought I would share it. The idea being to buy a 2Br apartment and renovate it and sell in 18 to 24 Mths whilst making a profit after all costs without renting it out. As with any investment exercise past performance can give you an idea for potential outcomes but nothing is guaranteed. The "profit" comes more from tax savings than selling the property at a price higher than actual costs, this (tax saving) of course is individually variable depending on income and tax rate of residence.

Residence Meilen, Salary 250K

Apartment in Flims purchase 500k aimed selling price 700k.
Costs
200k Deposit (40% of purchase price for holiday homes)
Interest @ 1% of 300k for 2 years 6k
Neben cost for 2 years 11k
Renovation 150k
Capital gains tax 6% up 100k 6k
Capital gains tax 11% above 100k 11k
Agent fee to sell 3% (or sell it yourself) 15k
Total Cost 199k

Tax saving.
250k Salary 46.6k year
100k Salary (deducting renovation cost) 6.4k year
175k Salary (deducting renovation cost over two years) 22.6k year

So in this summary, you could have a holiday apartment and be 20k a year in front! But not a lot of people have access to 350k and a salary of 250k with very few tax deductibles but if you do I could assist you, pm me.
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Old 20.06.2019, 14:38
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Re: Holiday Apartment Purchase

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Just for information, I ran through an cost exercise for a client recently so I thought I would share it. The idea being to buy a 2Br apartment and renovate it and sell in 18 to 24 Mths whilst making a profit after all costs without renting it out...
I thought I had read there are penalties for selling so soon after buying, to avoid this type of property speculation?
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Old 20.06.2019, 16:35
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Re: Holiday Apartment Purchase

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I thought I had read there are penalties for selling so soon after buying, to avoid this type of property speculation?
All cantons have capital gains tax which is the "penalty", the rate varies depending on the canton and time owned, Graubünden has one of the lowest maximum rates which is 11% on gains above 100k at the end of the first year which makes it attractive. Depending on what is actually done and how it is described in invoicing it could be more renovation or capital works, one cuts down your personal tax the other lowers capital gains tax but I am a carpenter not an accountant.
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Old 21.06.2019, 10:16
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Re: Holiday Apartment Purchase

Graubünden has a very clear list of what is value-maintaining (which is deductible against income tax) and what is value-increasing (which is deductible against capital gains on sale), see link. Columns 1 & 2 (management, maintenance) are deductible against income tax, column 3 (running costs) are only deductible for homes that are rented out if included in gross rent, column 4 (investment costs) are deductible against capital gains on sale, and column 5 (day-to-day living expenses) are not deductible at all:



https://www.gr.ch/DE/institutionen/v...gen/035-02.pdf


And here's the underlying practice in GR:


https://www.gr.ch/DE/institutionen/v...gen/035-01.pdf







Another point is the capital gains taper, which also varies by canton. For instance in Zurich, the taper starts after just 2-3 years of ownership, in Graubünden there is no taper until after 11 years of ownership. Zurich also adds an extra CG penalty for sales less than two years after purchase.
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