Key Facts
- Unavoidable entry costs: Notary and land registry fees as well as transfer tax vary depending on the canton and can amount to between 0.1% and 3.3% of the purchase price.
- Ongoing maintenance and insurance: Every year, around 1% of the property value should be set aside for renovations and refurbishments. In many cantons, building insurance is also mandatory.
- Tax burdens due to imputed rental value and profit tax: Owners must pay tax on the imputed rental value as notional income and pay profit tax on the sale of the property, which can amount to up to 40% of the profit.
Owning real estate involves costs that are often underestimated and go beyond the pure financing costs. Anyone deciding to buy a house or apartment should not only consider the purchase price and mortgage interest, but also the important cost factors that can arise over time when owning a property. This article highlights the most important additional costs and shows what future and current owners should pay attention to in order to avoid surprises.
1. insurance and ongoing maintenance: regular financial obligations
Almost all cantons in Switzerland require buildings insurance to cover damage caused by fire and natural disasters. The cost of this insurance depends on the value of the property and can amount to several hundred francs per year. In addition to this insurance, ongoing maintenance costs should also be taken into account. As a rule of thumb, owners should set aside around 1-2% of the property value each year for renovations and refurbishments.
2. tax aspects: Imputed rental value and profit tax
In Switzerland, property is taxed as “income” through the imputed rental value. The imputed rental value increases the owner’s taxable income, which can be somewhat offset by deductions for mortgage interest. When the property is later sold, property gains tax is also payable, which can amount to up to 40% of the gain, depending on the canton. These special tax features should be taken into account in long-term financial planning in order to avoid financial bottlenecks.
3. renovations, energy-efficient refurbishments and community costs: long-term investments
Long-term investments are important cost factors in real estate ownership. Over the years, renovations and refurbishments may become necessary in order to maintain the value of the property . Energy-related renovations such as improving thermal insulation or replacing old heating systems are becoming increasingly important and often more expensive due to increasing regulatory requirements. At the same time, they offer tax advantages and in some cases even state subsidies. If you live in a condominium, you should also keep an eye on the community costs that are incurred annually and can vary considerably depending on the property and management, such as contributions to building maintenance, garden maintenance, cleaning of common areas and reserves for major renovations.
Graphic: Costs over the life cycle of a property
4. notary and land registry fees: Unavoidable entry costs
The purchase of real estate requires a notary and entry in the land register. These fees vary from canton to canton and are between 0.1% and 1% of the purchase price. As the buyer and seller usually share the notary and land registry fees, it is advisable to clarify the division of costs at an early stage. In this way, misunderstandings can be avoided and you have a clear idea of the costs incurred from the outset.
5 Transfer tax and promissory notes: regional differences
In some cantons, a transfer tax is payable on the purchase of real estate, which is usually between 1 and 3.3% of the purchase price. This tax is only paid by the buyers and can represent a considerable additional burden depending on the region. In addition, there is the mortgage note, a document that is entered in the land register to secure the mortgage. The preparation of this document can cost a further 0.1 to 0.3% of the purchase price.
6. planning and construction: costs in excess of the purchase price
When building a new house or extensively renovating a house, costs for architects, estate agents and insurance are incurred in addition to the actual construction. Unforeseen events such as changes to plans or construction delays can put an additional strain on the budget. Connections for water, electricity and internet are also often more expensive than you initially think. To avoid surprises, you should plan a buffer for such eventualities.
Conclusion: Financial clarity for long-term success
Property ownership is a major decision and comes with many benefits, but also with numerous hidden costs. Precise planning is essential to overcome these challenges. With a realistic assessment and a buffer for unexpected costs, property owners can manage the financial aspects of ownership well and enjoy their home in the long term.
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