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Home ownership and taxes
Home ownership lowers your tax burden year by year
Income tax
Owning property affects your income tax in two ways. On the one hand you must declare the imputed rental value of your home, which is calculated as hypothetical income. On the other hand you can deduct your mortgage interest payments and your upkeep costs from your taxable income. The treatment of imputed rental value and tax-deductible upkeep costs varies from canton to canton.
TopWealth tax
You must declare your residence for wealth tax purposes. This is based not on the market value of your home but on its tax value. However, you may deduct from that the amount of your mortgage, which is often higher.
Influence of the planned tax reforms
The Egger family lives with two dependent children in the canton of Zurich. The couple has an average taxable income of CHF 110,000 from gainful employment.
| in CHF | |
|---|---|
Purchase price of home | 650,000 |
Down-payment of 20 % of purchase price Total Mortgages |
130,000 |
1st mortgage at 4 % interest rate |
422,500 |
The Eggers’ annual amortization is CHF 5,200. In 20 years they will save a total of CHF 46,914 in taxes* through direct amortization. The interest that could be earned on such tax savings is not included in the calculation.
* Tax rates vary according to municipality. This calculation takes into account imputed rental value, tax-deductible mortgage interest payments, upkeep costs and amortization as well as the effects on wealth and church taxes. This example is based on the municipality of Adliswil in the canton of Zurich.
| Year |
Mortgage in CHF |
Amortization in CHF |
Mortgage interest in CHF |
Tax savings from home ownership in CHF |
|---|---|---|---|---|
1 | 520,000 | 5,200 | 21,775 | 3,105 |
2 | 514,800 | 5,200 | 21,515 | 3,015 |
3 | 509,600 | 5,200 | 21,255 | 2,926 |
10 | 473,200 | 5,200 | 19,435 | 2,381 |
20 | 421,200 | 5,200 | 16,848 | 1,592 |
Total* | 46,914 | |||
*Total tax savings accumulated in 20 years
Influence of the planned tax reforms
If tax legislation is amended in the next few years to eliminate taxation of imputed rental values and the taxdeductibility of mortgage interest payments and some upkeep costs, your tax liabilities will change accordingly.
Important legal information - please read the disclaimer before proceeding.
Products and services in these webpages are not available for US persons, for the exclusion of residents of other nations see the disclaimers relating to the actual services.
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