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-   -   Buyer paying agent's fees - tax implications? (https://www.englishforum.ch/housing-general/293215-buyer-paying-agent-s-fees-tax-implications.html)

meloncollie 26.07.2019 09:14

Buyer paying agent's fees - tax implications?
 
Stumbled across a real estate agency touting it's 'new concept', where the property seller pays no fees, rather the buyer pays the agent's commission (IIRC 2.5%). This agency seems to have a lot of properties on offer, so I assume sellers are finding that an attractive model. Hope it doesn't become a norm - paying the piper yet unable to call the tune - but given this market...

So to my questions:

If I understand the present tax practice, a seller can deduct the agency fees from capital gains taxes on the sale. Is there any tax treatment to be aware of for a buyer who has to pay the fee?

Or, can the fee be considered in the base price to determine CTG against eventual sale? (After all, 2.5% of many millions isn't exactly pocket change...)

Many thanks.

fatmanfilms 26.07.2019 09:39

Re: Buyer paying agent's fees - tax implications?
 
Quote:

Originally Posted by meloncollie (Post 3085962)
Stumbled across a real estate agency touting it's 'new concept', where the property seller pays no fees, rather the buyer pays the agent's commission (IIRC 2.5%). This agency seems to have a lot of properties on offer, so I assume sellers are finding that an attractive model. Hope it doesn't become a norm - paying the piper yet unable to call the tune - but given this market...

So to my questions:

If I understand the present tax practice, a seller can deduct the agency fees from capital gains taxes on the sale. Is there any tax treatment to be aware of for a buyer who has to pay the fee?

Or, can the fee be considered in the base price to determine CTG against eventual sale? (After all, 2.5% of many millions isn't exactly pocket change...)

Many thanks.

It's definitely a cost of acquisition just as if the seller is paying it's a cost of disposal so yes it's part of the base cost.
It's often done in France as legal costs & fees are charged at about 9% to the purchase price & agents fees are double around 5/6%. (saves buyer about 0.5%)

doropfiz 26.07.2019 10:12

Re: Buyer paying agent's fees - tax implications?
 
Quote:

Originally Posted by meloncollie (Post 3085962)
Hope it doesn't become a norm - paying the piper yet unable to call the tune - but given this market...

Well, the model of the seller's paying the agent's commission leaves buyers paying, too, (since the agent's fee is effectively built into the selling price) yet unable to call the tune.

The process is then easily done according to the set procedures of the agent and the seller. Unless the buyer is strong enough to provide an alternative, he/she is then also bound into the way the agent does the sales agreement, and perhaps even the default lawyers chosen by the agent and/or the seller, etc.

Could you please post a link to the real estate agency company you've found, that does it the other way round? Thanks.

meloncollie 26.07.2019 14:15

Re: Buyer paying agent's fees - tax implications?
 
Caveat: The following is a rant based on broad generalizations.

I know there must be decent agents out there... and I hope one day to meet one.

---

In the model where the buyer pays the buyer is at a heightened disadvantage. The buyer is not the agent's client (even though the concept of fiduciary duty seems to be weak here) but rather the person who pays is the person the agent is directly working against.

Call me crazy, but when I am paying a fee in the range of 50-100K, I expect something for my money. If only a measure of control. And I certainly do not want to pay that kind o' cabbage to someone who is actively working against my interests.


---

But such is the property market here. There are so few decent properties and so much competition for them that people will pay large amounts of money for nothing, out of desperation.

---

I'm not going to link this firm, for obvious reasons.

---

Anyway, no matter how wonderful the property might be I will not pursue it if an agent works to the 'buyer pays the agent's fee' model.


Thus endeth my rant o' the week day hour.

k_and_e 26.07.2019 14:21

Re: Buyer paying agent's fees - tax implications?
 
Quote:

Wer zahlt die Maklerprovision?

Rechtlich gesehen müssen die Kosten des Immobilienmaklers vom Verkäufer getragen werden (Bestellerprinzip), da dieser im Vertragsverhältnis steht. Denn der Makler arbeitet im Auftrag des Verkäufers und muss das Objekt nach bestem Wissen und Gewissen sowie zum besten Preis verkaufen.

https://www.homegate.ch/inserieren/ratgeber/courtage

meloncollie 26.07.2019 14:31

Re: Buyer paying agent's fees - tax implications?
 
Quote:

Originally Posted by k_and_e (Post 3086047)

Interesting - I wonder what would happen then if a buyer challenged the 'buyer pays' model?

The agency does not call the fee a Maklerprovision. Could that get around the above?

AbFab 26.07.2019 18:41

Re: Buyer paying agent's fees - tax implications?
 
If you buy another property anywhere in Switzerland for the price you sell at, or higher, there is not capital gains tax to pay. Well, the work it all out, as that‘s what the tax off ice there for, then cancel it...

Today only 26.07.2019 19:36

Re: Buyer paying agent's fees - tax implications?
 
At the end of the day is it really important ?


An estate agent needs his commission, where it comes from is irrelevant really as it is all included in the price of purchase.


Seller pays, house price is higher
Buyer pays, house price is lower


An estate agent is most loyal to whoever pays his commission, but in all honesty, "loyal" may not be the most frequent adjective that springs to mind when talking a bout estate agents....

doropfiz 26.07.2019 20:59

Re: Buyer paying agent's fees - tax implications?
 
Quote:

Originally Posted by meloncollie (Post 3086045)
In the model where the buyer pays the buyer is at a heightened disadvantage. The buyer is not the agent's client (even though the concept of fiduciary duty seems to be weak here) but rather the person who pays is person the agent is directly working against.

Oh, I see now. I had - mistakenly - understood your post to mean that there was a new type of agent around, who was specifically working FOR the buyer.

I fondly imagined such a buyer's agent providing services such as listening to the buyer's wishes, scouting around looking for potential matching properties, approaching owners suggesting a sale even if the property is not yet on the market, checking items such as zoning and planning permission, bargaining with the seller on behalf of the buyer. In other words, just the inverse of what agents now typically do, who work for the seller.

Now that is a service which I think would be great to have! And for which it would be worth a buyer's paying a fee.

On reading your subsequent post, I now think you didn't mean what I understood at all. Rather, the agent you've now heard of, is still firmly on the side of the seller, working in the seller's interests, and now suddenly on top of that, the buyer has to pay that agent. If that's the deal, then I fully agree with you that that wouldn't feel right, as a buyer, not at all.

meloncollie 27.07.2019 08:59

Re: Buyer paying agent's fees - tax implications?
 
Quote:

Originally Posted by AbFab (Post 3086102)
If you buy another property anywhere in Switzerland for the price you sell at, or higher, there is not capital gains tax to pay. Well, the work it all out, as that‘s what the tax off ice there for, then cancel it...

Ja aber...

I don't expect to purchase another property in Switzerland - this would be a last hurrah. I'll either leave feet first, or with a transatlantic ticket. So for me, CGT is something to factor into the equation.

And on the subject of CGT, we are looking for a Ferienhaus as a compromise to selling the primary house.

I thought I had read that CGT applies to Ferienhäuser in all cases, but can't seem to find that reference. (Last week's heat seems to have permanently melted my brain.) Can anyone confirm?


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