Step 5: Reality Check (assuming one does not work in Switzerland and have Swiss-related income)
Buying a property typically always costs more than you thought it was going to cost. That's why it's important to know what you can expect. Costs have been divided in taxation expenses, "one-off" acquisition costs and "running" costs.
The Tax Convention Permit
Although this is by no means a tax consulting site we did want to highlight this tax" opportunity" to you. The Tax Convention Residence Permit is reserved for wealthy people, who intend to move to Switzerland to live, not work. You must have a declared net capital of at least one million Swiss francs and an annual income of at least 150'000,- Swiss franc and be willing to spend a substantial part of the year (180 days) in Switzerland. The advantage of this unique permit is that you pay a fixed fee as income tax that is minor and not in proportion to your actual income and in any case much lower than the rates applied in other European countries.
Net-Worth Taxation
The net-worth tax is levied by the cantons and municipalities on the fair market value of total assets. In computing the value for net-worth taxation purposes, taxpayers may deduct from the total market valuation of their taxable assets:
- Mortgages and other liabilities
- The generally allowed tax-exempt amount (in Ticino up to CHF 200.000)
The net-worth tax rates are progressive. In 2003 they ranged in Ticino from approximately 0,18% (for net-worth up to CHF 200.000) to 0,54% (for net-worth up to CHF 5.000.000) for married couples living together. If you are foreign, given this net-worth tax and the low interest rates on mortgages, it may be advantageous to maximize the mortgage on a property. For further information please visit Swissnetwork.
Income Taxes
For an overview on the total effective percent rate for federal, cantonal and municipal income taxes please visit Swissnetwork.
Yearly Expenses
- In case of a condominium about CHF 9.000,-/year, including heating. In case you purchase a detached house you will probably need to budget a similar amount for maintenance
- Federal and Cantonal Taxes (assuming no other income in Switzerland): about CHF 2.000,- per year
- Cost for tax consultant to submit tax forms: about CHF 500,-/year
- Waste Disposal Tax: about CHF 300,-/year
- Lugano Turismo "Tourist Tax" (for non-residents): CHF 80,-/bed in the property
- Household insurance: CHF 500,-/year
- If you bought a detached house you will need to get a separate insurance policy for the property. In the case of an apartment this insurance is typically arranged through the Residents Association and is included in the condominium expenses. It is good to check this and ensure that there is adequate coverage
Monthly Costs
Here is an overview of typical monthly costs, actual costs will vary depending on the property and your personal preferences:
- Electricity costs: CHF 100,-/month (paid quarterly)
- Internet provided by Swisscom: CHF 49,-/month
- "Fixed" Telephony provided by Swisscom: CHF 25,-/month
Note: To get a Swisscom account you will need to make a deposit of typically CHF 1.000,-