Purchasing your own property might seem like a luxury rather than a necessity, nevertheless recent surveys indicate that the global demand for purchasing property is increasing day by day. If you are thinking of purchasing your own home what pitfalls must you avoid? What do you need to know about paying mortgages and taxes? How can you certify your contract to buy your home? These are just some a few questions we would like to answer in this blog.
What to Consider Before You Buy
The decision to buy a house is affected by each family’s circumstances, on one hand a family may decide that it is better to rent a house or an apartment and avoid the responsibilities that come with owning a home, on the other hand another family might want to avoid the anxieties of uncertain housing and settle into a property of their own giving their children more freedom to enjoy a particular environment.
Whatever the choice, there are a few basic facts that you must look into prior to purchasing a home in Switzerland. If you are a foreigner living in Switzerland you will need a permit to purchase a house. No one can terminate your lease; you can also make whatever changes you like on your home or apartment subject to the building regulations of the commune canton or condominium.
Paying Mortgage And Tax
Many can hardly afford to pay for their home from their savings, in this situation a need arises for a mortgage or a long-term loan on which you pay interest. In Switzerland the basic mortgage covers 65% of the price, for most people this does not suffice, therefore a second mortgage is required to pay up to 80% of the price. It is advisable to note that most banks charge a higher interest rate on the second mortgage.
Paying taxes on your property is inevitable, property tax is payable by the individual or legal entities recorded in the land register. The tax you will pay on your property is calculated in the full taxable value of the property without taking into account any of the related debts or mortgages. The property is taxed at its location regardless of where the owner lives.
Home-owners in Switzerland have to pay income tax on what is known as ‘rental value.’ The rental value tax represents what you, as an owner would receive if you rented your home to someone else. You can deduct mortgage interest payments and other costs for the upkeep of the property from your taxable income, provided that you take note of this when filling your tax returns.
How Can You Certify Your Contract
If you are buying a house or an apartment it must be formally certified by a notary i.e. a lawyer. All parties involved in the purchase must sign the official contract; these include the purchaser, seller, and lawyer. The lawyer will then notify the Land Register Office of the ownership once the contract has been signed. The fees and costs for this will vary from one canton to another, nevertheless the lawyer’s fees are normally shared by the purchaser and seller.
There are several forms of home-ownership this will depend on whether you will buy the property on your own or with another person. If you are buying the house alone or in a co-ownership you will need to indicate that on the purchase contract, this information will be recorded by the Land Register.
If you are the sole owner of the property you will have to use your own capital to purchase the house, in addition you will also be responsible for any maintenance, damages and payment of interest to the bank. If you are purchasing the property with someone else you will need to indicate that on your purchasing contract as joint ownership. In this case regardless of the amount of money each person has invested in purchasing the property joint decisions will have to be taken regarding the property i.e. decisions relating to the sale of the property for example.
The third form of homeownership is co-ownership; in this form of ownership each individual’s share is recorded in the Land Register. Each owner can freely dispose of their share provided that they consult the other partners.
FERZ SA will discuss potential home-ownership options and sort out all legal contract transactions, call or email us for a consultation.