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Old 15.06.2007, 11:37
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sellin three family house [positive equity]

hi i have lived in switzerland for 10years with my wife. we now wish to live again in england. five years ago we bought a rundown three family house in biel. the buying price was very low as the place was a ruin and is in baurecht. i was imployed by my swiss wife and worked full time refurbing the house. the house is now sort of finished and we wish to sell.

i have been informed the notar will keep back all the money over the buying price. the tax office can then take up to a year working out the tax due. this is bad in our case as the buying price was so low and we have a lot of investment tied up in this house.

my question, does anyone know how i can overcome this problem.

thx banu
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Old 15.06.2007, 11:40
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Re: sellin three family house [positive equity]

I believe that they can only withhold positive equity if you sell and remain in the country without buying again (and within 2 years of purchase).

I am sure Richard will have some advice and I've modified your thread title so that it might be read a little more
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Old 15.06.2007, 11:51
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Re: sellin three family house [positive equity]

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hi i have lived in switzerland for 10years with my wife. we now wish to live again in england. five years ago we bought a rundown three family house in biel. the buying price was very low as the place was a ruin and is in baurecht. i was imployed by my swiss wife and worked full time refurbing the house. the house is now sort of finished and we wish to sell.

i have been informed the notar will keep back all the money over the buying price. the tax office can then take up to a year working out the tax due. this is bad in our case as the buying price was so low and we have a lot of investment tied up in this house.

my question, does anyone know how i can overcome this problem.

thx banu
This is an interesting and common problem and I guess from your question that you will not be happy with the reply...

When you buy this kind of property you are doing it with the intention of adding value to the property. When you do that you must declare this. Ie I have spent 50K renewing the roof and get the Insurance valuation increased as you go along. Probably you have not being doing all of these steps. If you have not then you will have a simple bit of maths to look at.

Sales Price - Buy price = Profit.
Profit subject to Gewinnsteuer ie profit tax. This can be anywhere up to 70% of the profit depending where you live!!!!! Five years is the minimum period before discounts on profit tax apply and they won't be great...

If you have declared the improvements then the following applies:

Sales Price - (Buy Price plus cost of improvements) = Profit.
This of course changes things substantially...

However the following also applies. Each sale is entered into the land registry with the sale price. If a property is sold and the sale agreed by a Notar as is almost always the case then the notar is liable if the profit tax is not paid. If a Notar is not involved in the sale then the liability for profit tax is ultimately with the purchaser - so beware if buying.
As tax demands and payments tend to crawl in this country do not expect to see any money quickly...
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Old 15.06.2007, 12:56
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Re: sellin three family house [positive equity]

Well,this is one thing,but depending on which area the house is in, the price of the land per sqm might have gone up considerably as well ,so you'd gain also from that.:-(
So you should not only consider the price for the house 'only',but alos for the value of the land it stands on.

( am I talking gibberish here ?)


For example if the house is around lower Zentralstrasse, Zentralplatz to Kreuzplatz,the level of the cost ot the land there is still about the same, same goes for the area around the whole Dufourstrasse.

But if it's for example close to the new developpements close to the Drahtwerke,where they built new houses à gogo,good school nearby and a new Kindergarten to be built,in that area the prices of the land have gone up.

You can get an 'amtliche schätzung' of it all excecuted by the Biel taxoffice:

http://www.bielbienne.ch/ww/de/pub/v...on/steuern.cfm

Amtliche Bewertung der Grundstücke
Neben der Auskunftserteilung über Grundstücke an die Besitzer oder andere Amtsstellen, bearbeiten wir die jeweiligen Handänderungen. Ausserdem treffen wir Abklärungen über eventuelle Neubewertungen von Grundstücken nach Renovationen oder Umbauten und veranlassen diese bei Bedarf. Ein wichtiger Bestandteil ist auch die Überwachung des Versicherungsschutzes mit der Gebäudeversicherung.
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Old 15.06.2007, 13:43
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Re: sellin three family house [positive equity]

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This is an interesting and common problem and I guess from your question that you will not be happy with the reply...

When you buy this kind of property you are doing it with the intention of adding value to the property. When you do that you must declare this. Ie I have spent 50K renewing the roof and get the Insurance valuation increased as you go along. Probably you have not being doing all of these steps. If you have not then you will have a simple bit of maths to look at.
Richard, how/to whom do we declare this?

We bought a house in fairly run down condition (not that the sale price was anything close to a bargain, mind... this was three years ago, at the top of the market). The house turned out to be far more run down than we had expected, and we have put a considerable sum into renovating it.

We declared a small portion of our renovation costs as tax deductions (Am I right that only replacement of non-functioning existing stuff, rather than additions, can be deducted?) For instance, when we found that the fireplace did not work (the wiring had clearly caught fire and shorted out) and we had to have a new one built - we claimed that cost as a deduction. We put in a new bath, but as it was an addition, not a repair, we did not claim that.

On the advise of our tax folks, we did not claim the costs of new flooring, woodwork, kitchen renovation, new tile and fixture for existing baths, as they thought those deductions could be questioned as upgrades.

I was under the understanding that, at the sale of the house, we could claim:

sale price - renovation costs (excluding those already claimed as tax deductions) - buying price = taxable profits.

So I'm wrong?

And, it has recently come to our attention that the building, even in renovated condition, is already insured for more than it should be (we took over the insurance from the previous owners, at the suggestion of the agent. ).

So... what should we do to ensure that we can deduct the renovation costs from profits when we sell?

Thanks...
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Old 15.06.2007, 13:48
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Re: sellin three family house [positive equity]

You can avoid this tax (Grundstückgewinsteuer) by buying another property in Switzerland at the same price as the selling price of your present home within two years. Or by living there for 10 years (or more).

My bank, ZKB (Zürcher Kantonalbank) issues a list of the tax levels which vary from canton to canton. The tax decreases by the length of time you have been there to zero after 10 years in some cantons.

Your local tax office will be able to tell you the estimated amount that will be due. And google.ch will find you more info...
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Old 15.06.2007, 14:14
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Re: sellin three family house [positive equity]

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My bank, ZKB (Zürcher Kantonalbank) issues a list of the tax levels which vary from canton to canton. The tax decreases by the length of time you have been there to zero after 10 years in some cantons.
To Zero in very few cantons and after 5 years it is only just in line for a reduction. The figure here will be rather high...
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Old 15.06.2007, 14:22
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Re: sellin three family house [positive equity]

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Richard, how/to whom do we declare this?

We bought a house in fairly run down condition (not that the sale price was anything close to a bargain, mind... this was three years ago, at the top of the market). The house turned out to be far more run down than we had expected, and we have put a considerable sum into renovating it.

We declared a small portion of our renovation costs as tax deductions (Am I right that only replacement of non-functioning existing stuff, rather than additions, can be deducted?) For instance, when we found that the fireplace did not work (the wiring had clearly caught fire and shorted out) and we had to have a new one built - we claimed that cost as a deduction. We put in a new bath, but as it was an addition, not a repair, we did not claim that.

On the advise of our tax folks, we did not claim the costs of new flooring, woodwork, kitchen renovation, new tile and fixture for existing baths, as they thought those deductions could be questioned as upgrades.

I was under the understanding that, at the sale of the house, we could claim:

sale price - renovation costs (excluding those already claimed as tax deductions) - buying price = taxable profits.

So I'm wrong?

And, it has recently come to our attention that the building, even in renovated condition, is already insured for more than it should be (we took over the insurance from the previous owners, at the suggestion of the agent. ).

So... what should we do to ensure that we can deduct the renovation costs from profits when we sell?

Thanks...
There are two things that are often confused here... Renovation and upgrade cost.

What you are talking about above is renovation. Renovation can and often does mean maintaining the house in a reasonable condition. So to use your example. If your bath tub needed replacing because it had become scratched and the enamel was chipped and the bath was of a similar size and type ie not a whirpool then this would be regarded as renovation costs. If on the other hand the bath was missing because the previous owner had not finished putting it in or used a tin bath, then this would be upgrade. In all cantons Upgrade costs can be added to the cost of purchase of the house to reduce your property gains tax. However the replacement of the bath with a new one because the old one was getting on a bit and not in the best condition is regarded as renovation and is tax deductible in the current year, but is negated in the calculation of property tax by depreciation which can be factored in.

As to whom do you declare this. Go tell your local town hall AND the cantonal property insurance - they will then organise a value reassessment if there has been external improvements.
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Old 15.06.2007, 23:44
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Re: sellin three family house [positive equity]

Thanks, Richard!

Coincidentally, we are expecting a visit from the taxman soon... SZ is sending estimators out to view all homes in the canton as part of Eigenmietewert (tax on the theoretical rental value of an owner-inhabited home) reassessment...
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Old 28.12.2008, 22:45
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Re: sellin three family house [positive equity]

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You can avoid this tax (Grundstückgewinsteuer) by buying another property in Switzerland at the same price as the selling price of your present home within two years. Or by living there for 10 years (or more).

My bank, ZKB (Zürcher Kantonalbank) issues a list of the tax levels which vary from canton to canton. The tax decreases by the length of time you have been there to zero after 10 years in some cantons.

Your local tax office will be able to tell you the estimated amount that will be due. And google.ch will find you more info...
Do you have a link to this list?
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Old 28.12.2008, 23:58
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Re: sellin three family house [positive equity]

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Well,this is one thing,but depending on which area the house is in, the price of the land per sqm might have gone up considerably as well ,so you'd gain also from that.:-(
So you should not only consider the price for the house 'only',but alos for the value of the land it stands on.

( am I talking gibberish here ?)
Yes you are

The OP mentioned that his building is in "Baurecht", which means that the land does not belong to him!
He has to pay to the owner of the land a fee every year...
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Old 29.12.2008, 00:28
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Re: sellin three family house [positive equity]

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Yes you are

The OP mentioned that his building is in "Baurecht", which means that the land does not belong to him!
He has to pay to the owner of the land a fee every year...
Which, unless I am mistaken, would be known to Brits (and maybe others) as "leasehold".
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