Further Information on Switzerland
1. Co-ownership charges (about 0.8% to 1% of purchase price p.a.)
It is commonly estimated that the annual running costs of a building are about 0.8%
to1% of the purchase price. These costs are divided up proportionally between the
owners, according to the size of the apartment.
These expenses include:
- Caretaker / social security contributions
- Maintenance of building and materials
- Water / gas / electricity and heating
- Insurance and various taxes
- Gardening and maintenance of roads
- Administration fees and various expenses
- An allocation to the building's renovation fund
The manager (of the co-property) collects the relevant amounts covering the total
expenses incurred by the building. These are payable quarterly or half-yearly.
2. Taxes amount to about 1.3% of purchase price p.a.
Taxes are paid to three bodies:
- The Swiss Government
- The Canton
- The Commune
For individuals the only taxable property and income is from that located in the
Canton Valais. All other properties and income is taxable at the place of residence
of the owner. However, all such holdings must be declared to the relevant tax authorities.
However, if you decide to take a mortgage you can offset the mortgage interest against
the rental income thereby minimizing the tax payable.
Cost and Legal Formalities
The purchase of a chalet becomes valid once the owner is registered at the Land
Register. The purchase fees amount to a total of 2.5% (Notary and registration fee)
By Power of Attorney, the future owner entrusts the appointed notary's office with
the duty of ensuring that all the legal formalities are respected, particularly
the registration of the deed in the Land Register and releasing the acquired apartment
from any previous mortgage.
At the preliminary payments (i.e. deposit) must be made to the notary, deposit into
his client account.
Construction guarantee (for new buildings only):
The federal construction guarantee is:
- Five years for construction defects
- Ten years for hidden defects.
For resale properties, there is no guarantee
In the event of death there is no inheritance tax for the specific case of direct
descendants in the Valais region of Switzerland , which means the property goes
to the next of kin.
Financial and Legal Consideration
Taxes and profit from real estate (Capital Gains tax)
In the case of resale, the property is subject to an appreciation tax. As the purchase
price is not indexed to the cost of living in Switzerland , the taxable profit is
the difference between the sale price and the purchase price.
The purchase price means:
- The actual purchase price
- Purchase fees
- Possible added value (e.g. renovations
- Any commission due to real estate agents
- Other costs
The rate of Capital Gains tax decreases according to the years of ownership.
To date the principal source of profit for foreign investors has been the currency
hedge of the Swiss Franc.
It has allowed the initial capital:
- to be protected from depreciation
- to increase in value (profit speculation)
- to protect itself against inflation
- to be self-managing by net-returns.
Finally, the most important and less quantifiable return is the pleasure you will
have from using your property and the enjoyment gained from the security and tranquillity
The standard loan granted by Swiss banks for purchases is about 66% of the sales
price (incl. parking space). This loan is usually granted in the form of a debit
to a current account and only the apartment qualifies as security.
Traditional financing through a mortgage can also be arranged. The interest in this
case is lower but the account is not as flexible in its use as the current debit
The rate of interest is fixed in stages and can vary depending on the state of the
Swiss economy. A larger mortgage can be arranged on the basis of additional security/guarantees
(shares, gold, etc.). Further information on mortgages can be obtained from AM Services