Property gains tax Switzerland: calculation, examples and tax tips

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If a property in Switzerland is sold at a profit, property gains tax is payable – a tax levied on the profit made on the sale. So that’s another cost factor to consider. The cantonal differences are sometimes large and some expertise is required to make the sale of a property a tax-efficient transaction for you. Below we take a detailed look at the basics of this tax and its impact on real estate sales.


Property gains tax explained simply


Property gains tax is a special tax and is levied in all Swiss cantons. As the name suggests, it relates to the profit made when a privately owned property or plot of land is sold. The amount of this tax on a sale depends largely on the legal provisions of the respective canton and the duration of ownership.
The net profit of the property is taxed. The net profit is the difference between the sales price and the investment costs.

Property profit = sales proceeds minus investment costs*

*Investment costs include the list price of the property, notary fees associated with the purchase, value-enhancing investments such as renovations, transfer costs and brokerage costs.


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Calculation of property gains tax


The calculation of this tax can be complex and depends on various factors, including the length of time the property has been held. In general, the longer the holding period, the lower the tax burden. Some cantons also grant allowances that can reduce the taxable profit. Properti offers you a calculator that easily calculates the tax.


Calculation example for a property in the canton of Zurich in accordance with § 225 of the Tax Act

Purchase price: CHF 800,000, sale price CHF 1,000,000, profit over the holding period therefore CHF 200,000 – The holding period is decisive for the amount of property gains tax – Holding period 5 years: property gains tax = CHF 65,930 – Holding period 20 years: property gains tax = CHF 34,700


Variation in tax rates depending on the canton


Property gains tax varies from canton to canton. Each canton has its own tax rates and regulations. It is advisable to familiarize yourself with the local regulations before making a sale. We have linked the regulations for Bern and Zurich here.


Graphic: Regional property gains tax comparison

Source: Credit Suisse


Effects on investment decisions


Property gains tax should be taken into account when making investment decisions. If real estate purchases and sales are planned, it is crucial to check the tax implications in advance. A longer holding period for the property reduces the tax burden.
If a property is sold and the proceeds are used to purchase a new property within a certain period (e.g. 2 years in the canton of Zurich ), the real estate gains tax does not apply. However, this only applies to permanent and owner-occupied properties.


Long-term planning as the key to success


Long-term planning is essential for minimizing property gains tax. When purchasing a property, it is important to consider the potential tax implications of a future sale at this early stage. Choosing the right time to sell can also play a significant role, as this can have an impact on the tax burden. Smart long-term planning is an important strategy for minimizing tax burdens.


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Conclusion


As a property owner, it is essential to understand your tax obligations and comply with the applicable regulations. Non-compliance with these regulations can lead to undesirable tax consequences.

In the world of real estate, it is crucial to be well informed about all aspects, including the tax implications. Property gains tax may seem complex at first glance, but with the right preparation and advice, real estate investments can be planned and executed successfully.

All data are without guarantee. The information on these Internet pages has been carefully researched. Nevertheless, no liability can be assumed for the accuracy of the information provided.

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