Real estate taxes
The term real estate taxes denotes the general term for several real estate-related taxes such as those when a piece of real estate changes hands and property taxes.
The owner of Swiss real estate is confronted with various kinds of taxes and fiscal authorities (depending on the Canton or commune).
Taxes are levied depending on the event and divided into those related to ownership and those related to change of ownership.
In the case of legal persons, financial net revenues as a rule are subject to income taxes, real estate to property taxes (see the following explanations on Real estate taxes as special taxes).
Real estate taxes are related to the ownership or use of a piece of property. They constitute a special tax closely related to property taxes, resulting in a double-taxation of real estate property. Usually, the current market value is taxed, in the case of agricultural or forest real estate, the earning capacity value is taxed.
Real estate taxes are levied in most, but not all, Cantons. The Federal Government levies no real estate taxes.
When a piece of real estate is sold or purchased, taxes accrue on real estate gains and change of ownership:
The real estate gains tax is an object tax. The extent of the profit realized on the object constitutes the tax assessment basis, calculated from the difference between the sales revenue and the fixed assets at cost. The latter consists of the purchasing price and permissible expenditures.
As a rule, the seller owes the tax on real estate gains. Depending on the Canton, the real estate gains tax is either levied as a special tax or together with the ordinary taxes on income and property. In Cantons levying it as a special tax, a progressive tax tariff is applied in most cases (fiscal surcharges for short-time ownership, fiscal deductions for long-time ownership between 10 and 60 per cent). The special tax has a disadvantage for legal persons in that write-offs and losses in the general earnings of operations cannot be offset against real estate gains.
With the federal law harmonizing taxes (in effect since January 1, 1993), all Cantons are obligated to levy a real estate gains tax.
The tax on the change of real estate ownership is a legal relations provision. Depending on the Canton, the assessment basis is made up of the official value or current market value of the real estate property (between 1 to 3 per cent). The tax as a rule is owed by the purchaser or the purchaser and seller jointly, however, they are both bound by a joint and several liability, depending on the Canton.
The tax authorities as a rule have an indirect as well as an immediate right of lien on outstanding real estate taxes to be debited to the real estate property. Unless the purchaser wishes to redeem the right of lien from his own accounts, he must make sure the seller has secured the likely taxes owed. The purchaser is well-advised to be familiar with the potential fiscal risks before the transaction.