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You have finally sold your house successfully, but the joy over the profits is clouded. Sounds familiar? This is because anyone who successfully sells a property must pay the cantonal real estate gains tax on the sales profit. But how is this tax actually calculated? We will show you how the real estate profit is determined in 3 simple steps.
The Confederation does not tax gains from the private sale of real estate, but rather considers them a private capital gain.
The cantons, on the other hand, levy a real estate gains tax (also known as real estate profit tax) on the successful sale of real estate, properties or condominiums. Said tax can be calculated in 3 simple steps.
1. Determine revenue
The revenue is the basis of the tax calculation for the real estate gains tax. It consists of the purchase price including all other services rendered by the buyer. As a rule, the notarised purchase price on the purchase contract is taken as the basis for calculation, but the compensation is what really matters.
Note: The revenue does not include payments received for movable objects (e.g. tables, chairs) which are taken over together with the property. For example, if someone buys a fully furnished apartment, the price of the inventory must be deducted from the purchase price. What remains after the deductions is the relevant revenue.
Example: Beat sells his apartment for CHF 800,000. The purchase price includes a designer sofa for CHF 50,000 and a wooden table for CHF 10,000. The relevant revenue is CHF 740,000.
2. Deduct investment costs
The investment costs are deducted from the relevant revenue. These include the final purchase price plus all value-enhancing expenses. Value-enhancing expenses are expenses incurred to improve or embellish the property to be sold.
Examples of value-enhancing expenses are the repainting of rooms or the installation of a swimming pool in the garden. Also included are the costs of acquisition and sale, such as land registry fees or notarisation costs.
Example: Beat bought the apartment a few years ago for the friendship price of CHF 400,000. In the meantime, he has renovated the kitchen for CHF 35,000. Furthermore, he has to pay a notarisation costs of CHF 5,000 for the sale. If these costs are deducted from the relevant proceeds, a taxable property gain of CHF 300,000 remains.
3. Figuring out the tax rate
The taxable real estate profit multiplied by the tax rate results in the real estate profit tax owed. But be careful: the amount of the real estate gains tax varies not only from canton to canton, but also depends on the holding period of the property sold.
If you own a property for a longer period of time, you will be rewarded with a reduced tax burden. In some cantons, the tax is even waived completely after a certain period of time. This is the case in the Canton of Geneva, for example. Anyone who has owed a property for more than 25 years no longer has to pay real estate gains taxes in the Canton of Geneva.
Example: We assume that Beat is subject to a tax rate of 40 percent in his canton, taking into account the holding period. In this case, Beat will have to pay CHF 120,000 in real estate gains taxes.
How much does it cost to sell your house? The specialists at taxea will be happy to assist you with their comprehensive expertise.
