The Real Estate Encyclopedia
Buying Property in Switzerland
Category - Global Real Estate - Europe Real Estate

Buying Property in Switzerland
Legal aspects 

1. Short outlay

 

Foreigners who are not Swiss residents are permitted to buy a holiday home in so-called “tourist areas”. The property size is restricted to approx. 200sq.m. of net living area, there may also be restrictions for the maximum surface-area of land (1000sq.m.). The owners need to occupy their property at least 3 weeks per year.

Foreigners with a residency permit (the former so-called permit B for foreigners living in Switzerland as “main residence”), are free to buy property.

 

2. Details as of 2005

 

Property and residence

 

In regards to properties the Swiss law differentiates between "Non-residents”, “residents with restrictions (B-permit”)” and “citizens and/or permanent residents (C-permit)”.

 

The first two groups are subject to restrictions - to prevent foreign speculation with Switzerland’s limited land:

 

a) Buying holiday property as a tourist:

 

You can buy a (1) property of up to 200m² of net living area and 1000m² of land, in areas which are defined as “tourist areas”. Net living space will have to be calculated; a 250m²-house or -flat will probably sum up to 200m² net. These figures define a rather small property, however. You apply for a buying-permit, which will be granted provided you have no criminal record in Switzerland. There may be opportunities to buy larger properties for holiday purposes and your real estate agent will inform you how such opportunities might arise. You are not permitted to re-sell your holiday property for 5 years (unless in severe circumstances), nor to sub-let your property for commercial purpose all-year-round, and you are required to live in it for a minimum of 3 weeks per year and a maximum of 3 consecutive months twice a year.

 

b) Buying property for residential purpose (“main residence”):

 

I.e. declaring to have the property as the “center of your private life" and “not being absent more than 6 months in a row" per year, and to pay main taxes in Switzerland

 

Upon application for such residency-permit (the former type B), you can buy property (with a not very strictly handled upper limit to its grounds of 3000m²) as Swiss do. Once you have received the permit the acquisition will be settled. 

 

IF you are over 55 years of age, declaring not to work in Switzerland and living off savings or foreign income, you will receive the residency-permit easily and you might be able to take advantage of a very beneficial Swiss tax-benefits known as “flat-tax”, as mentioned below in this document.

 

IF you are under 55 years of age, declaring not to work in Switzerland and living off savings or foreign income, you

will be required to provide proof of your investments to confirm that you will not require the aid of social benefits. Most probably, a possible “flat-tax” will be the higher the younger you are.

  

IF you wish to live and work in Switzerland, you will have to apply for a work-permit first, which will be granted to you depending on your occupation:

-          If you are an employee, the employer will have to apply for you.

-          If you own your own business, you will have to apply yourself; in both cases you are likely to receive a work-permit. You will then receive a residency-permit, which allows you to buy property (as mentioned above).

-          If you own or found a company in Switzerland with more than 50% of the capital being Swiss, you can buy unlimited properties through your company.

 

c) Buying a “secondary residence for professional reason”

 

If you have to come often to Switzerland - for professional reason - you're allowed to buy a "secondary residence" without restriction and without taking legal main-residence. You have to make proof of course that there is professional reason for you to be here on a regular base (being head of a company with a Swiss branch, for ex.) and that you are in need of a suitable residence (the larger the residence, the more you will have to give proof why you’re in need of such a large residence). The law does not specify how many times per year you have to be here, it says "on a regular base". 

 

d) Buying commercial property (office-buildings, superstores, factories etc.)

 

Can be acquired freely, and for residential purposes the special procedures mentioned above will apply. This rule excludes apartment-complexes which are considered for residential and not for commercial purposes.

 

NOTE:  Working residents have the right to bring their families with them.

 

The Swiss agreements with EEC foresee free choice of property within EEC / Switzerland for all their citizens by approx. 2008, Swiss law will have to change step-by-step to get to this agreement.

 

There are other minor conditions, which we would be delighted to explain further, should you be interested in buying a Swiss property.

 

All the given m² figures are approximate and to a certain extent subject to negotiations between the buyer and the authorities.

 

Residency and Citizenship

 

If you are applying for residency, the first permit you will be granted is Permit B, with restrictions as mentioned above. After 5 years of Permit B you can apply for Permit C (legally close to Swiss citizenship in most aspects, but without voting power). Once you have a Permit C you will be permitted to apply for Swiss citizenship, which will have to be granted by your local council.

 

Taxes

 

All Swiss residents and citizens are of course subject to yearly taxes. Taxes are calculated both on income (approx. 10%-40% from “net income after deductions”, the net income is calculated in a complicated procedure) and on wealth (approx. ½% of net wealth). These taxes are subdivided in council, cantonal and federal tax. Each council has its own applicable tax multiplier (from 50% to 140% of calculated taxes) to define the council’s tax, so taxes may vary from village to village. 

 

Property is always - for every owner - subject to taxes, considered both income (a theoretical or effective income through a property) and wealth (the official, i.e. registered value).  For a specific property we can calculate exactly what the taxes will be, which are approximately: Calculate between 1/1000 and 4/1000 of purchase price for

yearly wealth-tax, and additional 1/1000 to 10/1000 for yearly income-tax (example: a property with a purchase price of $1 million would have yearly tax costs of min. $2000 up to max. $14'000).

 

In Switzerland there is a very attractive tax scheme for foreigners called flat-tax. Under circumstances, a foreigner taking residence in Switzerland without working (B or C), can apply for a yearly flat-tax, which will be deducted and calculated from his lifestyle in Switzerland, neither considering his worldwide wealth nor his worldwide yearly income (but of course considering his declared wealth in Switzerland and the possible income hereof). This flat-tax will be fixed and not changed in the future, unless the person undertakes a considerable change in his lifestyle which is defined by the property (size/cost). Minimal flat-tax is starting from about 35’000 CHF (27’000$) per year, taking a minimum yearly income of 150’000 CHF (115’000$) as base hereof.

 

Notary and purchasing fees and taxes

 

These fees have to be paid by the buyer and added up (all fees, taxes, notaries, etc. combined) to 2% of the purchase price, to be paid with/at purchase.

 

Permits and/or Residencies application (cost)

 

The residence permit normally costs between CHF 1000. - and CHF 4000.-.

 

Other expenses

 

No other expenses should be incurred apart from the ones mentioned above on top of buying and maintaining a property. Of course you have to add the normal running / maintenance costs of the property, including the different public services (some of which might be compulsory, as waste disposal tax, basic tax for water supply, basic tax for electric supply, etc.) and the compulsory contents and building insurance.

 

Sale proceeds

 

The procedure of acquiring a property can take between 1 week and probably a month, and the purchase price normally has to be paid upon signing the notary’s contract. Until the required permits are issued (and the purchase can therefore be registered) it takes a minimum of an additional 1 month, and sometimes up to 7 - 8 months. During this time the already paid purchase price is withheld and blocked by the notary - if a required permit is not granted, it will be returned to the buyer. If it is foreseeable that the procedure will take a long time, you can agree with the notary and the vendor to guarantee the amount for the purchase price and to settle only after the permits have been granted.  For more details ask for our brochure “the procedure”

 

Real Estate’s commissions

 

Unless otherwise stated, the real estate agent's commission of 3-6% (different parts of Switzerland) is included in the purchase price (and paid to the agency by the vendor, after having received the purchased amount). Sometimes the buyer is asked to pay something like 2 or 3% on top of it, but only if it is a very complicated case for the agency to prepare all the legal documents or if the client had other issues.

 

All the above explanations are approximate, we always check the details with each of our clients to find the best solution and if necessary, we are always happy to involve one of our specialized lawyers. All explanations are given in good faith, to the best of our knowledge and strictly for informative purposes only; we decline any ongoing responsibility.   

 

Over 50% of our clientele is foreign, so even if the procedures appear complicated be assured that after a short while you will find them as simple as we do. If you do not wish to be too involved, do not worry, we can handle all the paperwork with the Swiss authorities on your behalf.

 

 

WE WELCOME YOU TO A HAPPY STAY IN SWITZERLAND

 

Please contact us for any further question at:

 

Peter Rabitz

Wetag Consulting International Division

Wetag Consulting

www.wetag.com

info@wetag.ch

+41 91 751 3106



About Wetag Consulting
Wetag Consulting is a boutique real estate brokerage in Locarno, Ticino, Switzerland with branch offices in Lugano and Ascona, serving the three big lakes Lago Maggiore, Lago di Lugano and Lago di Como as well as Ticino's beautiful valleys. The company features a broad selection of well selected properties focusing on the luxury segment of the real estate market such as luxury villas, apartments, penthouses and estates. With its international division, Wetag Consulting also offers its clients an equally selected choice of fine real estate world wide. This blog covers news, ideas, and information pertaining to this real estate marketplace and local lifestyle.


References


External Links
www.swissmediterraneanlifestyle.com
 
 
Category(s)
Global Real Estate - Europe Real Estate
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