You can save a lot of money as a homeowner with careful planning: you can deduct mortgage interest rates, maintenance costs and indirect amortization through pillar 3a from taxable income.
Familiarize yourself with deductions you can take because of your home and get an overview of the greatest saving factors.
You can deduct 100% of your debt interest from taxable income. This includes mortgage interest: the more interest you pay, the less your income will be taxed.
Renovation and maintenance costs can be deducted from taxable income when they are preserving your real estate value. This could involve, for example, replacing old windows, garden upkeep or painting work. Investments that serve to increase the value, such as installing a new sauna, are not deductible.
If you only accrue low maintenance and renovation costs in one year, you can still deduct a flat-rate amount from your taxable income. Depending on the canton, the deduction can amount to 10% for newer properties and 20% of the imputed rental value for older properties.
However, in years with high expenses, it pays to write a detailed list of actual costs and to deduct them.
Staggering bigger renovations
Bigger planned renovation works, which end up being higher than the flat-rate deduction, should be divided over multiple tax periods to keep down the progressive increase in the tax rate.
You can do so by dividing up work over individual renovation phases or carrying it out over the multiple years.
If you’d like to save on taxes, it makes sense to amortize indirectly for the following reason: You pay the annual amortization amount into pillar 3a and can deduct up to the specified maximum amount from taxable income. The mortgage amount stays the same.
If you pay back your second mortgage using direct amortization, however, you can deduct less debt interest every year.
You can also deduct the following costs from your taxable income:
- Investments to save energy such as energy-saving windows and switching to heat pump heating.
- All running ancillary costs and insurance premiums related to the real estate.
Save on taxes as a real estate owner
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