A vacation home in the Algarve or a city apartment in Barcelona costs less than a cottage in Ascona or an apartment in Basel. In addition, the cost of living is lower, the sun shines more often and people are (usually) more relaxed. That's why more and more Swiss are considering buying property abroad. For their vacations, for their retirement or as an investment. Because readers keep asking us how you can finance a house in Tuscany or how you have to pay taxes on an apartment in Paris, we have researched what you should know about buying real estate abroad before you start looking.
Swiss citizens can buy real estate in any EU country if they settle there. However, if you do not want to change your main residence, you need a permit.
Most people want to buy a house or apartment where they spend their vacations. There is nothing wrong with that. But remember that vacations and everyday life are two different things. On vacation, for example, you are less bothered if the charming postal worker chats with his colleague in between, than if you have to go shopping for the weekend after going to the post office. Think carefully about whether the local lifestyle suits you - or whether you are willing to adapt. Once you feel it might fit, give some thought to location. Many location-specific criteria for real estate are the same as at home; nstead, proximity to the airport, for example, suddenly becomes more important than proximity to the pediatrician or schoolhouse.
If you live or have lived at home in a single-family house with a large garden, you may prefer to live in a simple beach house or in a central city apartment during your vacations or retirement. You now have different needs, so the qualitative and quantitative object-specific criteria, that are important to you change. And new needs are added. For example, if you are looking for a residence for your old age, you should also give some thought to age-appropriate or at least barrier-free living. That means, for example, an elevator if you want to live on the 3rd floor, or a floor-level shower instead of the free-standing bathtub with feet. Therefore, plan for tomorrow and the day after tomorrow.
Spend time at the destination of your dreams, stroll the streets, drive across country and talk to locals. This will help you get a feel for where you feel at home. Once you know where you're looking for what, talk to a realtor. Preferably one who knows the local real estate market, has found houses or apartments for other Swiss and therefore knows what makes us tick. He can probably show you some properties right away. Maybe there is something there, maybe the visits will help him to understand you better. Then he can continue to search and send you interesting dossiers when you are back in Switzerland. Schedule a viewing once the agent has spotted some properties that you are seriously interested in.
In every country and for every major city there are real estate platforms to get a first feel for the market. In Italy, for example casa.it, idealista.it, immobiliare.it or tecnocasa.it and gate-away.com especially for buyers from abroad. By selecting your favorites, you simplify the realtor's search.
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In Switzerland, we (almost) build for eternity. That is why the quality of construction is higher than elsewhere. Be careful and check the object thoroughly before signing a purchase contract. Especially older houses or apartments. Visit properties you are seriously interested in with a professional. It costs something, but it's worth it because he can analyze the condition of the property, identify renovation needs, estimate renovation costs and discover defects you might have overlooked. In the best cases, he can also recommend trusted tradesmen, negotiate with the local building department, and plan, coordinate, and supervise the construction work for you. If you want to supervise the work, sometimes you should turn a blind eye: Not everywhere clocks (and people) tick the same as in Switzerland. Composure helps.
Play it safe and consult a lawyer who is familiar with real estate law in the place where the property is located. For example, there are lawyers in Switzerland who specialize in Italian law in general and Italian real estate law in particular. If you are looking for legal counsel abroad, he should already have advised Swiss clients and understand how we work. Ask your real estate agent or local Swiss you know for a recommendation. The Swiss embassy may also be able to help you.
Mortgage interest rates are lower in Switzerland than abroad. However, Swiss banks do not finance residential property abroad, some at best in foreign countries close to the border, for example a bank in Kreuzlingen finances an apartment in Konstanz. Therefore, you would have to finance the purchase with a local bank at the usual conditions in the country. The higher interest rates will probably eat up a large part of the lower purchase price. Unless you could pay for the house or apartment exclusively with equity - but then, to be fair, you would have to calculate the lost profits (opportunity costs) because you cannot invest the money. Take into account not only the purchase price, but all costs for inspections and travel, lawyer, realtor and notary as well as translations, the fees for register entries and notarizations and the transfer tax.
Do not underestimate the ancillary purchase costs. In Germany, for example, depending on the federal state, you pay 5 to 12 percent of the purchase price for the land transfer tax, the notary's fee and the land registry costs, as well as the realtor's commission, which you share with the seller.
If you keep your main residence in Switzerland, you do not have to pay tax on the house or apartment, but you do have to declare it. Although neither the federal government nor the canton or municipality taxes foreign real estate, a vacation home or apartment affects your tax burden. Taxable value and income such as rental income or imputed rental value are added to taxable assets and income to determine the tax rate and increase your tax rate for property tax and income tax due to progression. Example: You pay tax on 120,000 Swiss francs of income and 600,000 Swiss francs of assets and own a house in Brittany with a taxable value of 400,000 Swiss francs, which you rent out several times a year for a total of 50,000 Swiss francs.
