Calculating the property gains tax
The sales profit from selling land, properties, real estate and buildings is taxed. Gains from co-ownership shares in property and rights and easements (independent and permanent) entered in the land register, such as source rights, usufruct rights, building rights, rights of way, granting of water rights, are also subject to tax. Gains are defined as the difference between the price paid at the time of purchase and the proceeds received from the sale.
For example, if an owner paid CHF 1 million for a property and is now selling it for CHF 1.25 million, the CHF 250,000 gained will be subject to property gains tax. The tax therefore applies to profit arising when the selling price is higher than the original purchase price.
However, it should be noted that the tax is calculated on net profit. The tax burden could therefore reduce in proportion to the value-adding investments made. It is therefore important for the property owner to keep an exact account of all expenses that have led to an increase in the value of a property. Costs incurred in connection with the sale of the property may also be deducted, in particular advertising costs and fees/commission for a real estate agent or dealer. However, the deductions for the latter often have an upper limit. The values vary depending on canton and municipality here too.
A calculation might be made as follows:
Sale price CHF 1,250,000
Purchase price CHF 1,000,000
Profit (subtotal) CHF 250,000
./. Value-adding investments CHF 100,000
./. Advertising costs CHF 4,000
Net profit CHF 146,000
The amount of property gains tax arising from this net profit depends on the tax rate of the competent municipality or canton. If a seller wants to know how much property gains tax has to be paid, they can submit a request to the relevant tax office for the calculation of the estimated property gains tax. The request must contain the following information: