If a capital gain arises when you sell a private property, this is subject to cantonal real estate gains tax. You can cut your tax bill if you observe a few simple rules when selling, especially if you are planning to buy a new house as a replacement.

The taxable capital gain is calculated as the difference between the original investment cost and the sales proceeds realized. Value-adding investments can be added to the investment cost. If the sales proceeds are greater than the investment cost, the different is subject to real property gains tax.
Real property gains tax depends on length of ownership. The longer you own a property, the lower the amount of real property gains tax payable. Some cantons calculate using full years, other count in months. So it's worth timing the sale as best you can with this in mind. Real property gains tax is regulated differently from canton to canton, and different tax rates apply. To ascertain the current rates, please contact your local tax authority.

If you invest the proceeds from the sale of a property you inhabited in a new property, you can apply to have the real property gains tax deferred. In this case, although the tax authorities do require real property gains tax to be paid, it is provisionally deferred. The replacement purchase does not have to be made immediately following the sale. There are, however, different periods from canton to canton during which a new home must be purchased if you want to keep the deferral in place. These periods are between one and five years.

Example illustrating the full deferral of real property gains tax, as the entire sales proceeds are re-invested:

So long as you live in the replacement home yourself, the real property gains tax remains deferred. The retention period for both properties is calculated as an aggregate total. Depending on the canton, the deferred real property gains tax is reduced or eliminated altogether (after 20 years in the canton of Zurich, for instance) when you sell the replacement property at a later date.

For more information, get in touch with your UBS advisor.