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  #21  
Old 27.01.2021, 20:18
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Re: Mortgage basics for newbie

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As stated, a Swiss mortgage is just renting from the bank.
No it isn't - you own the property and have full rights to do anything you like to it as long as you don't negatively affect the value of the mortgage lien.

The bank has zero rights to the property unless you breach the terms of the loan, unlike a landlord even in Switzerland.
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  #22  
Old 27.01.2021, 20:20
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Re: Mortgage basics for newbie

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Are you sure? This link says that you would pay 1700pa
https://www.estv.admin.ch/dam/estv/d..._de.pdf#page16

Also note that you have a per person deduction of CHF 75,000 and that the taxable value of your property is generally far lower than the market value. Ticino Tom says his is several times less. Mine is about half. I‘m not going to go through the SG tax code, but certainly in ZH and SZ you can deduct 0.3% of your financial assets‘ value for wealth management fees too.
SG tax calculator gives 0.325% for 1 million, but my point is that a thousand or two isn't really negligible, just pretty low. If you can avoid it, and make a better return, that is surely a good thing.
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  #23  
Old 27.01.2021, 20:43
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Re: Mortgage basics for newbie

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in ZH and SZ you can deduct 0.3% of your financial assets‘ value for wealth management fees too.
Thats from taxable income, so the saving is nearer 0.1-0.15%
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  #24  
Old 27.01.2021, 23:27
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Re: Mortgage basics for newbie

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SG tax calculator gives 0.325% for 1 million, but my point is that a thousand or two isn't really negligible, just pretty low. If you can avoid it, and make a better return, that is surely a good thing.
But you are avoiding it by having a debt and paying interest (for the income tax portion).. So again will depend on the calculations and whether this makes sense at all.
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Old 28.01.2021, 14:26
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Re: Mortgage basics for newbie

One of the things I never understood for Swiss low-interest-rate buyers - you pay max 35% of the price because thats whats tax advantageous. Till you pay that (ie 15 years), you have a fixed interest rate. Then easy peasy wonderland paying only interests till you die and offsprings can pay inheritance taxes or its sold and they get some part of the value taxed in same way.

Now what about interests going back to say 5% or 8% in 20-30 years? Massive negative impact on property prices, not many buyers due to high interest rates and many desperately selling. But you are screwed, tied to that property that you can't sell easily and it costs you more than you can earn from renting it (and possibly more than you earn overall, if retired).

One can sell it maybe for that 65% of the price to just give all the money to the bank to pay mortgage (minus taxes from sale which I can imagine won't be small). Tough luck if prices fall deeper.

I know projections of finance houses don't expect this, but if there are some global reasons as they were in the past, Suisse can't ignore them. That's one hell of a risk exposure if you ask me in age when one is just living off the past efforts.

Or am I missing something?
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  #26  
Old 28.01.2021, 14:53
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Re: Mortgage basics for newbie

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One of the things I never understood for Swiss low-interest-rate buyers - you pay max 35% of the price because thats whats tax advantageous. Till you pay that (ie 15 years), you have a fixed interest rate. Then easy peasy wonderland paying only interests till you die and offsprings can pay inheritance taxes or its sold and they get some part of the value taxed in same way.

Now what about interests going back to say 5% or 8% in 20-30 years? Massive negative impact on property prices, not many buyers due to high interest rates and many desperately selling. But you are screwed, tied to that property that you can't sell easily and it costs you more than you can earn from renting it (and possibly more than you earn overall, if retired).

One can sell it maybe for that 65% of the price to just give all the money to the bank to pay mortgage (minus taxes from sale which I can imagine won't be small). Tough luck if prices fall deeper.

I know projections of finance houses don't expect this, but if there are some global reasons as they were in the past, Suisse can't ignore them. That's one hell of a risk exposure if you ask me in age when one is just living off the past efforts.

Or am I missing something?
Its completely correct and its why there is always that ongoing background "will it ever actually become law" thing going on to remove valuer locatif and balance it with the removal of renovation as being tax deductible.

If I knew that if I paid off my house I wouldn't have to pay a ridiculous tax for theoretically renting my own bloody home the first thing i would do is start paying it off, like any normal country does.

Here you are always tied to the risk of financial meltdown.
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  #27  
Old 28.01.2021, 15:15
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Re: Mortgage basics for newbie

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If I knew that if I paid off my house I wouldn't have to pay a ridiculous tax for theoretically renting my own bloody home the first thing i would do is start paying it off, like any normal country does.
The tax is actually very reasonable, on all other investments you pay tax on the 'benefit in kind' usually interest or dividends, so why should the advantage of living in a house also be taxable.
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  #28  
Old 28.01.2021, 15:20
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Re: Mortgage basics for newbie

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the taxable value of your property is generally far lower than the market value
The taxable value of the property doesn't really have any impact whether you put money into paying off the mortgage or investing/saving.

Wealth = Sum of Assets - Sum of Debts

Say I get a 50k lump sum - it doesn't make any difference if I invest and add it to the Assets or pay down the mortgage and reduce the Debts, my total Wealth still increased by 50k.

The only way to impact this is to put the money somewhere that doesn't count as Wealth - e.g. pension, maybe other options?
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  #29  
Old 28.01.2021, 15:37
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Re: Mortgage basics for newbie

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The only way to impact this is to put the money somewhere that doesn't count as Wealth - e.g. pension, maybe other options?
Spend it, sex, drugs & alcohol that 50k could vanish very quickly.
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  #30  
Old 28.01.2021, 16:14
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Re: Mortgage basics for newbie

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Spend it, sex, drugs & alcohol that 50k could vanish very quickly.
I already suggested that!

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Also not if you spend it
Actually alcohol is highly taxed as well. Stick to the sex and drugs.
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  #31  
Old 28.01.2021, 18:00
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Re: Mortgage basics for newbie

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The taxable value of the property doesn't really have any impact whether you put money into paying off the mortgage or investing/saving.

Wealth = Sum of Assets - Sum of Debts

Say I get a 50k lump sum - it doesn't make any difference if I invest and add it to the Assets or pay down the mortgage and reduce the Debts, my total Wealth still increased by 50k.

The only way to impact this is to put the money somewhere that doesn't count as Wealth - e.g. pension, maybe other options?
Correct, but you were talking about the wealth tax. The taxable value of the property is what counts for the wealth tax. So to have a taxable wealth from property of CHF 1m, you likely have a property worth CHF 2m (or if you are Ticino Tom CHF 5m), at which point I stand by my assessment that the wealth tax even at the CHF 3.5k your calculator states, but is at odds with the official document I linked, is negligible, particularly when you compare it to e.g. council tax in the UK or property taxes in countries like the US.
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  #32  
Old 28.01.2021, 18:02
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Re: Mortgage basics for newbie

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Spend it, sex, drugs & alcohol that 50k could vanish very quickly.
I know someone who spent more than that per year on the first two for 5 years!

I also know someone who was blowing 2 or 3k a night in the brothel, but don‘t think drugs were involved.

There‘s something dodgy about people who work in IT.
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  #33  
Old 28.01.2021, 22:05
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Re: Mortgage basics for newbie

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There‘s something dodgy about people who work in IT.

Correlation is not causation ;-)
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