Real estate ownership Condominiums: terms, figures and tips

Maintenance and ancillary costs also arise. Individual owners must be able to finance all repair, maintenance, redecorating, etc., to their unit themselves on a pro rata basis and according to their co-ownership share. The amount required depends mainly on the age and condition of the apartment, but one percent of the property value can be taken as a basis. It is often difficult to estimate general ancillary and management costs, especially for a new building. “We recommend asking the seller or a general contractor about them,” suggests Michel de Roche, Basel lawyer and President of the Professional Chamber for Condominium Ownership.

To finance repairs, experts recommend having a renovation fund to build up reserve funds on an ongoing basis. Having sufficient reserves is important. “In our experience, renovation funds in condominium associations are often underfunded,” says de Roche. This can lead to serious problems. For example, if there are insufficient reserves necessary for major building works, such as energy-efficiency renovations or a new roof, this can lead to conflict between owners.

As is generally the case with real estate ownership, as a condominium owner you can also deduct mortgage interest from your taxable income when filing your tax return. Value-preserving maintenance costs for your apartment, such as redecoration, replacement of kitchen appliances, renewal of floors, are also deductible. You can also deduct the costs of property administration and maintenance by third parties – details can be found in the guidelines of the cantonal tax authority. Payments into the renovation fund also qualify for tax relief, provided that the money is actually used for building maintenance and not for another purpose. Last but not least, energy-saving measures (e.g., installing a photovoltaic system, fitting energy-efficient windows, etc.) are also usually fully deductible. However, you cannot claim value-adding investments or expenses that are part of your living costs, i.e., household insurance premiums, electricity, hot water and heating costs.

Depending on your initial situation, it may be sensible for you to make capital repayments indirectly. Although the mortgage amount will not be reduced, this has tax benefits. The capital repayments are then paid, for example, into a pillar 3a account at the bank.

In principle, the condominium association can manage the property independently. However, it is both customary and advisable to outsource the management to a professional management company, especially if there are several co-owners. The management company is chosen by the condominium association.

The choice of management company is very important. As a rule, their duties are precisely defined in the management contract and, in some cases, also in the condominium bylaws. They include administration and accounting (insurance premiums, janitorial costs, heating and hot water costs), preparation of annual accounts, maintenance and management of the building as well as representation of the community vis-à-vis third parties. If the building is renovated, the management company will also be responsible for other tasks such as building analysis, budgeting, commissioning architects, etc.

Condominium expert de Roche mentions a further point: “The management company is also responsible for ensuring the condominium bylaws are observed.” They must speak to anyone who does not adhere to the agreed rules within their own apartment or in the shared parts of the building. If warnings by the management company do not bring any improvement, the issue would have to be discussed at the next annual meeting. For example, if, contrary to the condominium bylaws, an owner uses their apartment as a beauty salon or dental practice, they can be prohibited from doing so by majority vote. The next step would be for a court to decide the case after a complaint for non-compliance with the bylaws has been lodged. “Managers have to operate in delicate situations and therefore require a lot of tact,” states de Roche. Unlike rental apartments, a management company is sometimes forced to act against its own clients.