The children’s bedroom, where that poster of your favourite band used to hang, or the dining table at which animated family discussions took place – the parental home is far more than just a property to you.
Before you arrange a transfer of ownership, you should however answer several questions for yourself: who in addition to the parents must be involved in the transfer? Can you anyway afford the house? And which taxes and other charges will you be liable to?
How your parents can consign the house to you
Provided the property is transferred during the lifetime of your parents, it can take place as a gift, mixed gift, that is to say only partially in return for payment, or as a purchase at market value. In the case of a gift you must compensate your siblings using the value of the property on the day of death as a basis, unless an arrangement to the contrary was made.
The question is often asked as to how to distinguish between an advancement and a gift. Without a decree to the contrary a gift is an advancement. Your parents can however stipulate in the will that the value of the property must not be considered a portion of your inheritance after their death. That would then be a gift that is not under a statutory compensation obligation – with a caveat however regarding the remaining heirs right to a statutory share.
To transfer the property out of a community of heirs on succession, you must pay your siblings a proportionate amount. In principle the market value of the property is relevant as the accepted basis for that. Your parents can stipulate a lower transfer value in the will, in so far as they do not thereby negatively impact the legal share of the remaining heirs.
You can acquire the property by purchase, whereby conflicts of interest can be avoided. In the case of a purchase you should have the market value of the property assessed. In this way in the case of a later succession it cannot be presumed to be a mixed gift.
How you parents’ right of abode or right of use affect the transfer
If you grant your parents a right of abode or right of use, ownership resides with you. Depending on the age of your parents this can lead to a significantly lower transfer value.
However, you can in this case only move into the property if your parents no longer occupy the house (relating to the right of abode) or renounce the right of use. In addition, you should keep in mind the tax consequences. If your parents have a right of abode, they must pay tax on the imputed rental value – the wealth tax will be levied on the owner of the property. With a right of use your parents will pay tax on both the imputed rental value and also the taxable value of the property.
What you should think about, if you are transferring your parent’s house
- Enter into a publicly attested inheritance contract with your parents and siblings. Within this the property assessment should be ruled binding for all legally entitled heirs of the estate and their offspring. In this way you can avoid being surprised by a later equalisation settlement on succession.
- The property gains tax is regulated by the Canton. As a rule, with intra-family transfers (gifted or as a result of inheritance) you can apply for a tax deferral.
- With a gift or advancement, it can arise that the needs of the parents in old age raise the question of familial support obligations. It can happen, that you have to financially support your parents in such instances.
- If granting your parents a right of abode or right of use, you should take the entire situation into consideration – in particular as well the specific tax impacts, life circumstances and life expectancy, and any need for renovation of the property alongside the emotional aspects.
- Clarify whether the house is encumbered by a mortgage and how you can release this.
- Would you like to carry out renovations or building work? Then check before whether this is tax-deductible. In addition, you should consider how the costs incurred will be financed.
- If you yourself are going to live in the property, you could potentially finance it using funds from your pension fund. You should though clarify beforehand the impact on your pension benefits of a withdrawal.
- By acquiring a life insurance policy, you can safeguard your family in case something serious occurs. Should your income disappear, potential equalisation payments or mortgage obligations could still be paid.
Your client adviser will happily assist you with these undertakings, especially concerning the financial aspects. For legal questions regarding a transfer of ownership you should refer to a notary or lawyer
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