Capital gains tax on Swiss property

After thirty years in possession of my own home in the canton of Zurich, I have decided to sell the property and rent a smaller place closer to amenities. What can I expect to pay in taxes when I sell the property?

The exact taxes you have to pay depend on the canton and municipality in which the property is located. The federal government does not charge taxes on capital gains resulting from property sales.

Most municipal and cantonal laws on capital gains taxation of property take into account the difference between a property’s market value at the time of purchase and the price at which it is sold, and the amount of time over which you have owned the property. As a rule, the longer you own a property before selling it, the lower the capital gains tax rate will be.

In the Canton of Zurich, for example, capital gains tax is reduced by 3% per year for every year which falls between the fifth and twentieth year of ownership. The cantonal tax office uses multiple taxation tiers for capital gains on property of up to 100,000 Swiss francs, with the maximum tax of 40% applying to capital gains in excess of 100,000 francs. Gains of 5000 francs or less are not taxed.

To determine the profit earned on a property sale, all value-increasing investments in the property should be taken into account. In addition to the original purchase price of the property, the cost of any new construction, alterations or renovations made during your ownership period which increased the property’s value can also be taken into account.

Unless alterations were notarized, you will have to provide invoices, receipts or other clear proof of investments made. Only the difference between the sale price of your property and the sum of value-added investments counts as profit.

If you own an apartment, its share of assets held in a building renovation fund at the time of purchase must be stated separately from the purchase price because these assets are not accounted for when calculating capital gains tax on property.

In the Canton of Zürich, capital gains on both private and commercial real estate are taxed in the same way.

You can download Zurich’s Cantonal real estate capital gains tax schedule here:

https://www.steueramt.zh.ch/internet/finanzdirektion/ksta/de/steuerbuch/zuercher-steuerbuch-definition/zstb-225-1.html

Currently, the rates used by the Canton of Zurich are as follows:

First CHF 4000 of capital gains: 10%
Next CHF 6000 of capital gains: 15%
Next CHF 8000 of capital gains: 20%
Next CHF 12,000 of capital gains: 25%
Next CHF 20,000 of capital gains: 30%
Next CHF 50,000 of capital gains: 35%
Capital gains in excess of CHF 100,000: 40%

These rates are increased by 50% when you sell a property which you have owned for less than 1 year and by 25% when you sell a property you have owned for less than 2 years.

Your municipality may levy a real estate capital gains tax as well. You can request this information from your municipal tax office if it is not available on their website.

Best regards from Moneyguru