In Switzerland, the principle of “unity of residence” applies, which means that you may only have one residence within the Confederation, i.e. one main residence. There are some exceptions for second homes in Switzerland, such as vacation homes.
In this article, you will find out what a second home is, how to register it and what it means for tax purposes. We also look at the current situation on the Swiss real estate market with regard to secondary residences and the role of foreigners with secondary residences in Switzerland.
What is a secondary residence?
Strictly speaking, the secondary residence is not a domicile, but a so-called weekly residence. This means an apartment that is used by people who are not resident in the respective municipality. In addition, the apartment may not be used for professional or educational purposes and there is no deregistration of the main residence. Accordingly, a second house or apartment is almost always a vacation home for third parties.
The main residence is the spatial center of a natural person’s living conditions and is therefore a place where someone has their primary residence. The secondary residence, which is not to be confused with the second home, serves as a place of residence for educational or work purposes. This is not a residence, but a place of residence for weekly stays.
Depending on personal circumstances, the following situations may be considered as a place of residence for so-called weekly residents:
- Priority of place of work over place of family
- Priority of family location over place of work
- Separate residences of spouses
- Cross-border secondary residence
In all these cases, the aim is to find out where the person concerned has to pay tax. This is the primary residence, i.e. the main residence. In addition, there is a second residence tax for vacation homes and in some other situations. However, different rules apply to properties abroad.
Is a permanent campsite a secondary residence?
Many people wonder whether living on a permanent campsite also counts as a secondary residence. However, this is not welcome in Switzerland and is even prohibited in many municipalities. More and more places are banning permanent camping to avoid trailer parks. The situation is even stricter when it comes to main residences: although permanent campers are often equipped like a main residence, official living is hardly ever permitted on campsites.
Overnight stays on the campsite are often only permitted for a certain number of days. This is then a vacation, which is why no second home needs to be registered. If you live exclusively on a campsite or in a tiny house, for example, you must register this place as your primary or main residence. However, the municipalities often do not want anyone to live cheaply and often evict permanent tenants or only allow them to stay for a short time.
When and how do you have to register a secondary residence in Switzerland?
A second home must also be registered in Switzerland. It is therefore important that the reporting person is of legal age and capable of acting. It is often possible to register a second place of residence online via “eUmzugCH“.
You will need the following documents and information to register your second home in Switzerland:
- Family booklet or identity card
- Health insurance card or proof of insurance
- Possible details of the dog
If your second house or apartment is located in the same municipality, an online message to the residents’ registration office is usually sufficient. Remember that you do not have to log out. Rather, you register the second house or apartment for legal and tax reasons. You can find further information on the reporting relationship here.
Who has to pay a second home tax?
A second property is seen as a luxury and taxed accordingly. The tax rules are similar to those for permanently used real estate. This means that the imputed rental value must be taxed as income. This also applies if you are unable to use the vacation property all year round due to weather conditions, for example.
Note: In the Canton of Berne there is a special feature regarding the second home tax. In this case, only the imputed rental value for direct federal tax purposes applies to the vacation home. Rented apartments reduce the imputed rental value on a pro rata basis. However, you still have to pay tax on the rental income.
The sale of a second property is also subject to the usual taxes, such as property gains tax. The shorter the period of ownership of the property, the higher the tax. This is intended to prevent speculation in real estate, which is particularly important for vacation homes in the Swiss Alps.
How can I save on the second home tax?
If you are clever, you can make savings on second home tax. Building maintenance, for example, offers a great deal of savings potential. By spreading major maintenance work over several years, the progression calculation is used.
The savings effect through indirect amortization is also relevant. However, it is lower than for other properties, as a maximum debt of 60 percent is usually only possible for the purchase of vacation homes and new apartments.
Vacation home vs. second home: What is the current market situation for vacation homes in Switzerland?
The Second Homes Act has been in force in Switzerland since 2015. This stipulates that no new secondary residences may be permitted in municipalities with a proportion of secondary residences of over 20 percent. Exceptions are only possible in a few cases. The aim is to protect prices and social cohesion in popular vacation destinations. Second homes under existing law remain in place and may also be expanded.
Under the Second Homes Act, the cantons may designate areas in the structure plan in order to improve the occupancy rate of second homes, promote the hotel industry and support low-cost first homes. It is also possible to convert buildings worthy of protection into second homes in order to ensure their preservation. According to monument protection regulations, the external appearance of these properties may not be significantly altered.
The construction of new tourist apartments is still permitted in Switzerland. However, these must be rented out to short-term guests on a permanent basis, whereby the usual market conditions must be observed. The apartments must not be available for purchase.
These regulations are very important, as vacation properties are booming in this country. During the coronavirus crisis in particular, the price increase in the second-home market was greater than it had been around 10 years ago. This is due to the fact that more Swiss people spent their vacations in Switzerland. There is also a new interest in “concrete gold” and working from home in vacation homes.
In Ticino in particular, there has recently been a real estate boom due to tourists from German-speaking Switzerland. This was particularly evident in the Locarno area, where the glorious weather combined with the high quality of life is an attraction.
According to experts, interest in buying real estate in Ticino rose by around 30 percent in 2020 compared to the previous year. The coronavirus crisis has made it seem safer for the German-speaking Swiss to stay in Switzerland than in more distant foreign countries. Added to this are low mortgage interest rates and savings from the lockdowns.
The exact sales figures for vacation homes and second homes in the Swiss Alps are not yet known. What is certain, however, is that prices for both renting and buying are skyrocketing. However, real estate prices for primary residences in Ticino (which are already quite high) have not risen significantly to date. The region has also benefited greatly from the booming tourism industry.
The 20 percent limit from the 2015 Second Homes Act also applies here: As soon as an affected municipality in Ticino has more than 20 percent vacation homes, it may no longer approve any new ones. As a result, the prices of available properties are rising. Meanwhile, there is a vacancy rate in the region.
Foreigners with a second home in Switzerland: what do they need to bear in mind?
Many foreign nationals, especially Germans, like to invest in vacation properties in Switzerland. But a second home or a second home is also an option for work purposes. Like Swiss citizens, so-called cross-border commuters are subject to the obligation to register their second place of residence.
Anyone who spends less than 90 days per year in Switzerland as a non-employed person does not require a separate residence permit. However, anyone wishing to extend their stay must demonstrate sufficient financial means and take out health and accident insurance.
Taxes for a second house or apartment in Switzerland are only payable by foreigners if they earn income from work in Switzerland and spend more than 6 months a year in the country. Alternatively, you are considered a “non-resident taxpayer” or “cross-border commuter” and pay taxes in your home country instead.
Good to know: There is an upper limit on the number of so-called aparthotels with vacation apartments or residential units that may be sold to foreigners. In Switzerland, this limit is 1,500, which is distributed among the cantons. In cantons such as Geneva and Zurich, the sale of vacation homes to foreigners is even prohibited altogether. Current quotas for the sale of properties to foreigners can be found here.
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.
