The average age of homeowners in Switzerland is 58. At this age, the children have left home and many parents are concerned about their housing situation. Some because the house is too big and the garden too busy. The others because they want to travel more after retirement or enjoy their retirement by the sea, for example. Of course, they could simply sell the house and buy an apartment with the proceeds. But many homeowners are emotionally attached to their house and want to keep it in the family. How can parents transfer their house to a child during their lifetime without disadvantaging their other children?
The simplest way is to sell to a child at market value. The proceeds of the sale - as with a sale to someone outside the family - flow into the parents' assets, which are later divided among all heirs according to the inheritance contract or will. It is important that the house is sold at its market value and that no one is advantaged or disadvantaged. The parents can have the market value estimated by a realtor or with our Property Valuation. Our market value estimate takes into account sales prices of comparable properties in the same region and is based on hedonic valuation, which is also used by banks. The child assumes the previous mortgage(s) and pays the parents the balance, or refinances the purchase entirely and pays the parents the full sale price.
A sale to a child for less than fair market value is legally a mixed gift and must be offset if more than one child is entitled to inherit. Example: If the family home with garden could be sold for 1.2 million francs, but the parents only want 1 million francs from their son, they have given him 200,000 francs. This is often well-intentioned, but can lead to disputes with siblings and have financial consequences for the son later on:
An outright gift to a child is an advance inheritance and must be offset if more than one child is entitled to inherit. Example: If the parents give their house, worth 1.2 million francs and mortgaged for 700,000 francs, to their daughter, this advance inheritance is worth 500,000 francs. Therefore, they would have to pay each of the other children 500,000 francs as compensation. The complete gift, like the mixed gift, may have financial consequences for the daughter later on:
Do you want to pass your house on to a child during your lifetime, but continue to live in the house? Then you can sell or give away the house and grant yourself the right of residence or the right of use. With both variants, ownership passes to your daughter or son, but the rights, duties and financial obligations differ:
The usufruct and the right of residence must be publicly recorded and entered in the land register. They end with the death of the entitled person(s). The right of residence is personal and non-transferable; the usufruct is transferable as long as it is not recorded as a personal right.
If you want to bequeath the house to a child only after your death, you must draw up an inheritance contract or a will. With this, you can assign the house to a child in sole ownership and stipulate how the other members of the community of heirs must be compensated if the house is worth more than his or her compulsory share (see "Selling a house to a child below market value" and "Giving a house to a child"). This is often the case because residential property is the largest asset item in most families. In an inheritance division contract, which all heirs must sign, the members of the community of heirs can determine how they want to manage, liquidate and divide the estate. Details such as the amount of the equalization payments can be stipulated in this contract.
Every death puts a strain on a family. Then it takes very little for family members to argue. Mostly about the estate. You can avoid this, at least to a certain extent: