A tax on the profit from the sale of a property
Whenever a property, including land, is sold at a profit, real estate gains tax is due. Of course, this only happens if the sale price is higher than the investment costs, i.e. if a gain is made on the sale. Namely: the investment costs are the sum of the original purchase price and the price of the expenses that increased the value of the property and were incurred by the buyer himself when he owned the property. In addition, the costs of purchase and sale can be deducted from the profit. These include agency fees, notary fees, etc.
Proportional and progressive tax rates
Depending on the canton, the tax scale differs and can be either proportional or progressive. In the cantons of Aargau, Appenzell Ausserrhoden, Basle-City, Fribourg, Geneva, Nidwalden, Obwalden, Thurgau, Ticino, Uri, and Vaud real estate gains are taxed proportionally. This means that each gain, regardless of its amount, is taxed at the same rate. At the same time, however, the duration of ownership is taken into account in some cantons with a degressive tax rate that leads to an increase or reduction depending on the holding period.
In the cantons of Appenzell Innerrhoden, Basle-Country, Bern, Glarus, Graubünden, Jura, Lucerne, Neuchâtel, St. Gallen, Schaffhausen, Schwyz, Solothurn, Valais, Zug and Zurich, real estate gains are taxed progressively, i.e. taxation varies according to the amount of the gain. Under this method of calculation, a surcharge may be levied if the holding period is short, while a reduction is generally granted if the gains are obtained after a long holding period.
Details can be found in the articles on each canton.
Get the right advice to make considerable savings
By taking a few important points into account, you can save a considerable amount of money on real estate gains tax.
It is important to choose the time of the sale deliberately. In cantons where the length of ownership is relevant for the calculation of tax, it is possible to save several thousand francs by postponing the date of sale. For example, it is better to sell the property after exactly 12 years instead of 11 years and 11 months. In this way, the tax rate will be reduced, resulting in a lower tax rate. In general, it is also worth considering whether it might be better waiting until the maximum tax allowance has been reached. For example, in the canton of Zurich it is reached after 20 years of ownership, but in the canton of Berne after 35 years.
In most cantons, real estate gains tax can also be paid by the new owner if it has not been paid by the seller. When selling, it must be explicitly stated whether the seller has paid the amount or whether it is deducted from the purchase price and paid directly to the competent tax authority.
Investments that increase the value of the property, such as converting the attic or adding a winter garden, must be deducted. Indeed, it is possible to deduct these costs from the total amount of the increase in value and thus avoid double taxation. However, it is important to keep all receipts for material and labour costs, otherwise they may not be claimed.
Similarly, the costs of buying and selling the property can be deducted from the profit. In addition to brokerage and notary fees, these also include the costs of placing advertisements online, transfer duties or early repayment indemnities due to the bank.
It is also worth considering deferring payment, especially in special cases such as inheritance, divorce or other unforeseen events. The time limits for deferring tax payments vary from canton to canton and this may allow you to defer payment.
Please read the specific articles for each canton to find out more about how the tax is calculated, which authorities are responsible for paying it and other important details.
If you have specific questions, you can also ask one of our local Neho agents for advice!
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