Hello,
I am trying to do the tax return by myself and just want to confirm my understanding of the following clause in the tax declaration:
(This is for canton ZH and I am on a B, "EU" permit, taxed at source as well):
I understand it that the clause 26.2 speaks about my taxable income from abroad. I am a bit unsure how to calculate it for the following scenario:
I have an apartment in my home country that I rent out and that is my only income from abroad. I also have a mortgage for this apartment in my home country that I am paying back.
Thus, do I put in 26.2 the number that equals "My net income from the renting out my apartment abroad MINUS my payments for the mortgage"? and do I put the same number for both "Staatssteuer" and "Bundessteuer"?
My home country has the no double-taxation treaty with Switzerland and I am submitting my tax declaration in my home country as well, and I am taxed there on my income for this apartment that is calculated as I specified above.
I know that I can hire a tax consultant, I just think that I might be able to do it myself.
I had a small property portfolio in the UK (now sold off) which was rented out.
For UK tax purposes I could deduct mortgage interest, decoration and repair costs and letting agents fees. I was then taxed on the balance less a personal allowance.
In my case (3 years ago), the Swiss tax authorities disregarded the income as real estate is taxed in the country where the asset lies. The only thing they did was to add the value of the RE to my overall worth to calculate the wealth tax due.
I never paid too much attention to this 26.2 field. For me, it is computed automatically by the ZH tax website and in the past years it was always a small positive number, which was deducted from my taxable income, so all good.
But now I get a 5 digits, negative number, which ends up making my taxable income HIGHER. I have no idea where this number comes from. I tried changing all input values related to my property abroad and the value in 26.2 never changes.
Anybody understands how it is computed? I am thinking I should skip the automatic "Steuerausscheidung" tool.
All true because the property generates rent (or eigenmietwert) and allows you to deduct expenses. But none of this ends up in the 16.2 section as far as I understand.
It's been some time since I went through the ZH tax regulations, but I believe it was explicitly stated that there's no Swiss tax from income from properties abroad, nor Eigenmietwert, nor any deductions, it only counts towards your wealth.
but I don't own any property abroad, so I'm disappearing as I might have misread/misremember something
There is no direct income tax on rental income from properties abroad. Still, the rental income is added to determine the tax rate, so one indirectly pays income taxes on the rental income abroad. Wealth tax is also calculated on worldwide wealth.
Anybody has an idea what is this negative number which ends up in section 26.2 after I run the automatic procedure? It's not the income from the property, which is reported somewhere else (also, it's negative... and no, it's neither the deductions relative to the property).
Check the sheets "Interkantonale/Internationale Steuerausscheidung", in particular the one that has Einkommen 2022 at the top of the table, the value in 26.2 comes from there and you can see what is adding or subtracting to it.
You are right. It does indeed come from there.
But it's still strange to me that, because I spent money on renovating a house abroad, my Steuerbares Einkommen goes up.
I had the same in 2019 (spent money to renovate a place abroad) and in that tax declaration, the 26.2 section was left blank. In other years I didn't do renovations so I always had a positive number in there (from the supposed income), which was then subtracted from my taxable income.
If I understand correctly, the money you spent on the renovation is making that your income from abroad becomes negative, so if 26.2 <0, then 25 - 26.2 is actually > 25 alone... which is absurd.
To me, if that is the case, your income from abroad should be cut to zero. If you cannot modify the Steuerausscheidung somehow manually, then I would only include as money spent on renovation the same amount you have as income abroad, so that the total results in zero. Because I do not think you have the obligation to declare that (on what you spent your money), it is just an option that may reduce your taxable income.
First you can only deduct from your rent income (or deemed rent income) money spent on maintenance , i.e., repairing existing elements.
For renovations (i.e. anything that, when done, would increase the value of the property) cannot be claimed as expenses.
Second the international repartition aims to redistribute negative elements on your tax return (eg all deductions) among swiss ones (which are taken into account) and foreign (which are not). One of the reasons is to avoid a perverse incentive due to the fact that rent income abroad is not taxed but loans are taken into account world-wide, so one could get tax-deductable loans in switzerland and spend on properties abroad which generate tax-free revenue. But aguably such repartition cannot end up with negative values unless of course your total spend was greater that all your annual income.?
Correct. But why is it absurd? 26.2 is negative because I spent more than the eigenmietwert of the property (small number, so not too hard to go above it when renovating).
This is what happened indeed last time I had a small negative number in 6.4 -> 26.2 was left empty.
I skipped the Steuerausscheidung and submitted ignoring the warning. It anyway says that it can make mistakes. I guess they'll correct anything that needs correcting.
It's really hard to draw the line. After X years you need to redo the kitchen or the bathroom or the roof or whatever. The taxable value of my property in CH is not changing over time, even though market went up and the place gets older, if I change a 30yo kitchen without upgrading it e.g., by tearing down a wall to make it larger, then this must be considered maintenance even though if I were to sell the place the day after, it'd obviously cost more than the day before... normally I send them all bills and let them decide
My total spend was greater than the property supposed income, that is why is negative.