Real estate gains tax: What sellers and buyers should know

4.11.2021
  1. What is a plot of land anyway?
  2. Who is liable to pay tax: the seller or the buyer?
  3. How buyers protect themselves from unpleasant surprises
  4. How is the real estate gain calculated?
  5. How is the real estate gains tax calculated?
  6. Tax delay: When do you have to pay?
  7. Other reasons for tax delay

If you sell your house or flat at a profit, you have to pay property gains tax. The amount depends on the net profit, the holding period and the location. Real estate gains are taxed differently from canton to canton in Switzerland. However, one thing is the same in all 26 cantons: If the seller owes the property gains tax, the property is liable - and the tax authorities may collect the unpaid bill from the new owner. This is important to know if you are considering buying a house or flat. But let's take it one step at a time ...

What is a plot of land anyway?

In most cantons, real estate is defined in the same way in the tax law as in the civil code. In addition to real estate and buildings, for example, co-ownership shares in real estate, independent or permanent rights entered in the land register such as building rights, usufructuary rights and spring rights or water rights and other easements are also considered real estate and are taxed. In most cases, however, the real estate gains tax concerns houses or flats.

Who is liable to pay tax: the seller or the buyer?

The seller is liable for tax if he or she makes a profit on the sale. If the seller does not pay his debt, the tax authorities may enter a legal pledge in the land register and collect the outstanding invoice amount from the new owner.

How buyers protect themselves from unpleasant surprises

  1. Ask the seller to deposit the tax amount with the tax office or in a bank account. The tax authorities can calculate the property gains tax before the sale.
  2. If the seller does not agree with point 1, deposit the purchase price in a bank account which the seller can only access once the property gains tax has been paid.
  3. If the seller does not agree to either point 1 or point 2, pay the property gains tax and deduct the tax amount from the purchase price.
  4. Regardless of which option you and the seller agree on: Be sure to record in writing in the purchase contract how the real estate gains tax will be secured and paid.

If you wish, the tax authorities can calculate the property gains tax before the sale.

How is the real estate gain calculated?

The calculation is simple: sales price minus investment costs equals real estate gains. In most cantons, the investment costs are defined in the same or similar way as in the canton of Zurich:

  • Purchase price or market value 20 years ago if you have owned the property for more than 20 years
  • Value-enhancing expenditure, for example for a new kitchen or attic conversion, adjusted for insurance benefits and contributions from the Confederation, canton or commune
  • Landowner contributions such as pavement, sewage system or added value contributions
  • Realtor commission on purchase and sale, usually 2 percent of the purchase price plus value-added tax
  • Insertion costs for purchase and sale
  • Taxes for the change of ownership in the case of purchase and sale

How is the real estate gains tax calculated?

The real estate gains tax is a special tax and is due upon sale. Three factors are decisive for its calculation: profit, ownership duration and location. The cantons calculate the real estate gains tax very differently. These are the biggest differences:

  • Progressive or proportional: In most cantons, the tax is calculated progressively, i.e. at a uniform rate, for example 30 percent in the canton of Appenzell-Ausserrhoden. On the other hand, some cantons calculate the real estate gains tax proportionally. The higher the taxable net profit, the higher the tax burden.
  • Tax rate: A property gain of CHF 500,000 is taxed six times more in St. Gallen (CHF 164,000) after 10 years than in Sarnen (CHF 27,000) in the canton of Obwalden.
  • Long holding period: All cantons except Basel-Land and Obwalden grant discounts if the seller has owned his house or flat for a long time. Zurich, for example, grants a 5 percent discount for sales after 5 years, 20 percent after 10 years and 50 percent after 20 years. Geneva is the only canton to waive property gains tax entirely afte
  • Short holding period: In return, all cantons except Solothurn impose a supplement on short-term gains on real estate and thus impose a heavier burden on speculators. Zurich, for example, charges 50 percent more for sales after less than 1 year and 25 percent more for sales after 2 years, Basel-City even 60 percent more for sales after 3 years.
Good to know: In some cantons you can calculate the property gains tax online, for example in Bern, Lucerne or St. Gallen. You can find the market price of your house or flat in your personal Houzy account or you can estimate it free of charge with our property valuation.

Real estate gains tax: couple with tax return
If you sell a plot of land for a profit, sooner or later you will have to pay property gains tax.

Tip: Tax laws are complex and differ from canton to canton. That is why you should inform yourself before rather than after the sale. A real estate agent from your region who knows the tax laws and the market can give you advice and at the same time help you sell your house or flat
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Tax delay: When do you have to pay?

Real estate gains tax is not always due immediately. It is delayed if you buy a replacement property in Switzerland with the proceeds of the sale. Depending on the canton, you must reinvest the proceeds within one to two years; in exceptional cases, the deadline can be extended to four years. However, the tax delay is only granted for the replacement purchase of owner-occupied residential property - and only if the purchase price for the replacement property is higher than the investment costs for the property sold. If the purchase price is lower than the investment costs, the entire tax amount is due immediately (example 3). This occurs mainly if you sell a larger and more expensive house and buy a smaller and cheaper flat in its place.

Example 1 Example 2 Example 3
Selling price old property 1'100'000 Francs 1'100'000 Francs 1'100'000 Francs
Investment costs 800'000 Francs 800'000 Francs 800'000 Francs
Gains 300'000 Francs 300'000 Francs 300'000 Francs
Purchase price for replacement property 1'300'000 Francs 900'000 Francs 700'000 Francs
Immediately taxable 0 Francs 200'000 Francs 300'000 Francs
Tax delay for 300'000 Francs 100'000 Francs 0 Francs

Tip: Do you want to sell a property that is worth much more than it used to be? It may be worth waiting a few more years to benefit from a lower tax rate. In the canton of Zurich, for example, you reach the maximum tax rebate after 20 years and in the canton of Bern only after 35 years.

Other reasons for tax delay

Real estate gains tax can be delayed for many reasons. For example, because of changes in ownership due to inheritance, advance withdrawal or donation and because of changes in ownership between spouses due to changes in property law, separation or divorce. However, as soon as the house or flat is sold to a third party, property gains tax becomes due. It is calculated on the basis of the original purchase price, not the transfer value. For this, the holding period of the previous owner is taken into account. And if the sale price is invested in new owner-occupied residential property, the property gains tax can be further delayed ...

Good to know: Tax delay does not apply to second homes, holiday homes or rented properties. If you sell an apartment building, you may only defer tax on an owner-occupied flat.

A lot of money is at stake when it comes to real estate gains tax. That's why it's worth talking to experts. Ideally with a real estate agent who knows the cantonal tax laws and knows what you should look out for when selling or how to protect yourself from nasty surprises when buying. In our network you will find certified real estate agents from your region who we recommend to you with a clear conscience.

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