What is this 10-year rule thing about, anyway?
The 10-year rule is a myth surrounding the gifting of real estate and other assets. Suppose the following scenario:
- Person A gifts their house to their child, B.
- A few years later, Person A is now retired. If their income from pensions is insufficient, they can apply for supplementary pension benefits.
- At this point, their income and assets will be valued and assessed. This is where the gift can come back to bite them, as gifted assets are considered as if they were still in possession of the original owner, A.
- This means that by gifting their property to B, A has effectively prevented themselves from being eligible for supplementary benefits.
The myth of the 10 year rule – which, as we would like to stress, is a myth and thus false – goes as follows: If the property was gifted more than 10 years ago, it's not considered as an asset of A anymore.
The Myth of the 10-Year Rule
Many parents choose to transfer their property early to their children, mistakenly believing that after a 10-year period, the state can no longer consider the transferred assets. This is incorrect, as there is no such 10-year rule in Switzerland.
The myth about this supposed 10-year rule is widespread, even appearing on the websites of well-known Swiss banks and real estate firms. The origin of this myth remains unclear to us, but it may be related to a confusion with a similar law in Germany. This, however, does not apply in Switzerland.
What Is a Relinquishment of Assets?
If a person’s income or assets are insufficient to cover their living expenses or costs for care in old age (e.g., nursing homes), they are generally entitled to supplementary benefits.
When determining eligibility for these benefits, the state evaluates both income and assets. If a person has voluntarily relinquished assets—for example, through gifts, early inheritance distributions, or excessive spending—the state considers the value of those assets as if they were still in the person’s possession. This can result in a reduction of supplementary benefits or a complete loss of eligibility.
Transferring a House Can Become a Trap
Before supplementary benefits are approved, the state may also review the family support obligation. If the children of the person requiring care have sufficient financial means, they may be obligated to contribute to the care costs. This can mean that an early gift of property, which was intended as a generous or strategically planned transfer, can turn into an unexpected financial burden for the children.
Does the Transfer Expire After 10 Years?
In Switzerland, there is no expiration period for the relinquishment of assets. Transferring a house remains classified as relinquished wealth, even after a 10-year period.
That said, transferring a house early can still offer some advantages. The value of a gift reduces annually by CHF 10,000, meaning that after 10 years, the taxable value of the gift is reduced by CHF 100,000. Additionally, the valuation of the relinquished asset is based on its market value at the time of transfer, so any subsequent increases in the property’s value benefit the new owner.
