Holiday properties Financing rules and important aspects

Whether your dream property is a summer house overlooking the water or an apartment in the mountains – find out how you can turn this dream into reality. With our specialist knowledge of all financing-related topics, we are here to provide you with expert advice.

The rules governing the financing of vacation properties are different to those which apply to the financing of residential property. Please note the following points:

  1. Take account of financing rules: How does financing a vacation property differ from financing residential property?
  2. Consider tax implications: What do you need to consider when buying, owning or selling your vacation property?
  3. Take other special considerations into account: Which regulations and issues do you need to look into?

1. Take account of financing rules:

The rules which govern the financing of vacation property are different to those which apply to an owner-occupied home:

  • Up to 60% of the property's value can be financed with a mortgage
  • 1% of the total mortgage should be paid back every year

At an advisory consultation we will calculate your ideal loan-to-value ratio and establish whether or not you can afford your chosen property.

Financing of vacation properties

2. Consider tax implications

General taxes and fees which are payable when buying or selling vacation property

When buying or selling your vacation property, you may be required to pay certain taxes and fees:

  • Notary and land register fees
  • Real estate transfer tax
  • Real estate gains tax (if you generate a profit on the sale)

Here you can find an overview of the taxes and fees:

Impact on your income tax

When you own a vacation property, the tax authorities add the imputed rental value of the property to your taxable income. The imputed rental value is taxable in the canton in which your vacation property is located. If you have rented out your vacation property, then your rental income, rather than the property's imputed rental value, will be added to your taxable income. Mortgage interest and maintenance costs are tax-deductible.

Impact of a vacation property on your income tax

Impact of a vacation property on your income tax

3. Take other special considerations into account

Volatile prices

The price of vacation property can fluctuate more sharply than the price of residential property. We can assist you by offering the latest information on the market situation.

Choosing your method of financing

Very often, vacation properties are resold much sooner than residential properties.This is why you should consider at an early stage how long you plan to use your vacation property. It often makes sense to opt for shorter-term financing. If you sell your property before the mortgage period has expired, you will be required to pay additional costs and fees.

Impact of the second homes initiative

In 2012, the people of Switzerland gave their backing to the second homes initiative. As a result, second homes must account for no more than 20% of the all residential property in a given municipality. In areas where the 20% threshold has already been exceeded, there are to be no more approvals for second homes.

We provide you with reliable information on the current situation in your desired location and on the impact of the initiative on your local property market.

Whether you are dreaming of a summer house, you already own a chalet in the mountains or you wish to sell your vacation home: we are there to help you with our specialist knowledge.

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