Traditional Swiss villages located in the French-Swiss Alps offer an excellent opportunity to acquire a beautiful holiday home. While buying a property in Switzerland as a foreigner is possible, there are a few things to keep in mind and look out for. This is why we’ve laid out the most important things when buying a Swiss property. This blog will cover the following topics:
- Can a foreigner buy a property in Switzerland?
- What does the buying process look like?
- Where to buy holiday homes and their restrictions?
- Regional restrictions and availability
- Purchasing costs and tax payments
Can a foreigner buy a property in Switzerland?
Yes. However, there are specific regulations to keep in mind on where and what foreigners may buy as well as imposed restrictions at national, regional and local levels. A residence permit will not be granted if you’re purchasing a house, an apartment or land in Switzerland.
If you are already living in Switzerland and are an EU/EFTA national, you have the same right as a Swiss citizen to purchase real estate. However, should you be a foreigner who does not live in Switzerland, you’ll need to require authorisation to buy a property. Authorisation can be acquired at the authority in the canton where the property is located. Each canton has specific conditions for obtaining authorisation that may vary according to the type of property and its location. The authorisation granted has to be used for the specific form of use intended and not for different purposes. An authorisation is valid for three years unless an exception is granted.
What does the buying process look like?
The process of buying a property in Switzerland doesn’t differ much from buying a property somewhere else. Especially as a foreigner, it is very useful to have an agent to guide you through every step. This starts by making an offer and if it is taken and a deal has been reached/ made, the process of authorization begins.
To start this process, all the necessary information needs to be prepared for an application for a foreign purchase permit and the deed of sale. The documentation needed includes the buyer’s and sellers’ personal information as well as key information regarding the property amongst others. A notary needs to certify the permit and deed of sale. Depending on the canton you’re buying a property in, this can either be done at a notary of your own choosing or in some cantons has to be done by their official notaries. This process usually takes between 2 to 4 weeks.
After this, the deed of sale needs to be signed within 30 days by three parties: the seller, the buyer and the notary. Should you be unable to be present during that time, you might be able to sign a power of attorney. Once the papers are signed, the Land Registration is informed by the notary about the change in ownership. While this will also take a few weeks to be finalised, you might already be able to get the keys to your new property.
Where can I buy holiday homes and what restrictions are there?
In Switzerland, there is a national quota (currently 1,500 per year) of the number of holiday homes or units in an apartment building that can be sold to foreigners. While this notional quote is allocated between 17 cantons the most popular amongst them being Bern, Vaud and Valais, there are the remaining 9 cantons, such as Geneva, Zurich and Basel where the sale of a holiday home is not possible for a foreigner.
Furthermore, there are a number of conditions to be met before buying a holiday home in Switzerland. Ownership of more than one vacation home is prohibited and the property has to be situated in a tourist area. If you are buying a holiday home, you can rent out the property temporarily, not however all year round. The area of ground is limited to 1000m2 while the living area is not allowed to be bigger than 200m2.
Regional restrictions and availability
Since cantonal and local restrictions for buying a residential property as a foreigner differ a lot, we will give you an overview of the cantons of Bern, Valais and Vaud.
Bern’s cantonal restrictions are quite simple to start with. In any apartment building, only 50% of apartments may be sold to foreigners. Should you be a foreigner and bought a property, you may resell it at any time you like. Bern has five big resorts. In Gstaad, there are no local restrictions and in Mürren the market is completely closed. While in Grindelwald a foreigner may only buy properties valued higher than 750,000 Sfrs, in Wengen and Lauterbrunnen a foreigner cannot buy fully detached chalets, only apartments. In Interlaken, only certain properties can be sold to foreigners.
Vaud on the other hand doesn’t have any local restrictions in their resorts in Villars and Chateau d’Oex and Rougemont. According to cantonal restrictions, a foreigner may not resell their property for 5 years after buying it. However, this can be negotiated in the instance of ill-health or financial circumstances provided you don’t make a profit.
For the canton of Valais, the same cantonal restrictions apply as for Vaud. For most resorts such as Verbier, Grimentz, and Champéry there are no local restrictions. In Zermatt, foreign buyers are generally restricted from buying properties, however, there are occasional exceptions. The only other exceptions are Swiss nationals and B/C permit holders.
Purchasing costs and tax payments
Buying a property in Switzerland might not be as expensive as you might expect. In most cantons, the total purchase costs are between 2.5 and 3.8% including purchase tax, land registry fees and notary fees. However, the canton Vaud charges about 5%.
Should you be in need of a mortgage, registration fees are charged on a sliding scale which again varies from canton to canton. They roughly start at 1% but decreased a little the higher the loan is.
If you’re a foreigner and own a property in Switzerland, you’ll have to pay taxes to the federal government, the canton and the commune. While the municipal taxes vary from resort to resort, the annual property tax will roughly be 0.6% of the purchase price.
Income tax
Whether you’re renting your property out or not, property owners will have to pay tax for the right to use the property. A notional income is calculated based on your property and the local rental market that you’ll be taxed for.
Wealth tax
Wealth taxes are assessed at a cantonal level and are calculated based on all assets held by an individual in Switzerland. The property’s tax value determines the annual taxes levied by the canton.
Property tax
Owning a property without a residence permit means that most cantons charge annual property tax on top of wealth and income tax. In Bern and Valais property tax is about 0.015% and in Vaud only 0.010%.
Capital Gains tax
Depending on the duration of ownership and the profit made, capital gains tax is levied by the canton should you sell your property. Out of all 26 cantons, Valais for example has one of the lowest capital tax rates.
