How to declare UK apartments on Swiss tax return

Finance, Taxes, Banking, Insurance and Retirement
1
Hi,

Following on from my post about UK ISAs, I have similar confusion around UK apartment declaration.

Apologies if this appears as covered in other posts, I have done a search, but the information varies so much and I do have a special circumstance.

So the three main areas of confusion are

1) how to declare worth of the apartment(s) on the Liegenschaftenverzeichnis form

2) what to put as rent revenue if the apartment is unoccupied (or not fit to rent)

3) where to put the info (section 6 of main tax form Steuererklärung) or all on Liegenschaftenverzeichnis form

So for 1):

This have been a few posts about this, since UK properties do not have a official government-set value for use on Swiss tax returns. But house prices fluctuate wildly. I could use the Land Registry estimate (from their website houseprices.landregistry.gov.uk/price-calculator). Or as someone suggested, use insured value (which due to the current house price inflation is ridiculously low). Is there a tried-and-tested solution for this?

Sidenote: this should not be not declared in "Assets and home and abroad" section ("Auf steuerbare Vermögenswerte im Ausland", box 496 on page 4 of Zurich tax form), right? As I read in other posts that immovable assets like apartments are not taxed, but the value is used to calculate overall wealth...is this correct? Would be a negative overall value for me otherwise! :-P

So for 2), rent revenue:

So we have 2 apartments, one rented out, and one our UK family home (I used to short-term contract until recently, so it was wise to keep that in case things went pear-shaped).

For the apartment not rented, I read different things for this, from make a figure up, to use half of market rate, to use 0.045 of the purchase price (again would be so incredibly low as we bought the apartment before the boom).

Sidenote: the apartment was flooded from the upstairs neighbour, and needs renovation as a result. I read in other posts, that if it is uninhabitable, then the tax authorities might accept zero rental value? Certainly, when going home for Christmas, we have to use a hotel, as don't fancy taking our little one to a damp place that smells of mould.

So for 3) where to put the info.

There is a section 6 in the main tax form, I guess for the simple case, but since I have 2 apartments I can ignore 6.1 to 6.3 and I need to use a separate Liegenschaftenverzeichnis form and declare both apartments' combined value in 6.4 instead, right?

Oh, and on the first page of Liegenschaftenverzeichnis form, I do not put anything in Ertagswert column, as that's for commercial use (agriculture and forestry)?

Apologies if these sound very obvious questions, but my German language skills are still terrible. And when I pull late nights figuring this out, need it spelt out slowly!

cheers,

Slayer

2
The property/wealth tax in Switzerland is a strange concept to get your head around. They say if you've got loads of money you're likely to make loads of money from that money so we'll tax you on it, but only to the point where the tax doesn't decrease the value of your wealth. You're left with a chicken and egg situation. If you enter a rental amount it will calculate the capital amount for you from it. You can think that this is the amount of capital you should be taxed on in order to achieve that return. If you have an expensive house and rent it for peanuts then you're not making much money from your money so you don't pay much tax. On the other hand, if you don't rent it out you give the market value and it calculates a virtual income for you based upon a particular return on your capital. For my rented house, the rental amount gives a capital amount of about half of the market value of the house. In Basel the software asks for an official or land registry value. I don't know if they'll ask for any evidence.

There is the concept of a "tax brake" for wealth tax. Each canton has it's own rules but the general idea is that you shouldn't pay "too much" tax. It's usually limited to a proportion of the income derived from the wealth.

There are some scenarios that cannot be captured in the forms so you have to think of them as transferring the information to the tax people for them to peruse and then hope that they'll take any special circumstances into account in the assessment. You have to let them know of these circumstances of course. It seems to be the Swiss way that you try it on a bit and negotiate later.

3
I have a holiday house in Spain and co-own a house in Germany.

I asked the Zürich tax office what to do, and they said, I should write a letter saying (and including the exact words) "nach bestem wissen und gewissen" in which I should state what I believe to be the fair value providing some backing up for my guesstimate.

For the German property I used the purchase price, which I do to the best of my knowledge still believe to be the fair value. I specifically state this in my letter.

For the Spanish property I also pay property tax to the commune in Spain and I show the bill for that to the Swiss tax authorities (albeit the previous year's one as they don't normally send out bills until the following October) and the Zürich tax office accepts the Spanish value estimate as fair.

All I do every year is retrieve that letter on my computer, update the date, look up the exchange rate for 1st January and re-adjust any conversions, print it out, and stick those values onto my tax form and send in the letter (signed) with the tax form.

So far they've never quibbled over my approach

4
I thought about creating a new post for this, but it seems pertinent to my original questions...

We have 2 apartments, one rented, one not (was planning to rent, but other factors came into play)

So, for the rented apartment, the feedback from the Thalwil/Zurich tax authorities was to use a valuation based on a formula from the rental value:

(((monthly rent * 12)/7.05)*100).

For the second unrented apartment, I used an estate agent rental valuation to get an estimated value, and from that used their formula to calculate imputed rent:

Imputed rental value = (estimated value * 70%)*4.25%

This includes a discount (which I assume varies canton by canton).

The authorities don't seem to complain about this. However, I am still unclear on this original question:

Sidenote: this should not be not declared in "Assets and home and abroad" section ("Auf steuerbare Vermögenswerte im Ausland", box 496 on page 4 of Zurich tax form), right ? As I read in other posts that immovable assets like apartments are not taxed, but the value is used to calculate overall wealth...is this correct? If I leave it in there, I end up with a negative overall value for "Steuerbares Vermögen im Kanton Zurich", which always strikes me as odd.

Does anyone know about this?

Additionally, this page:

https://www.ubs.com/ch/en/private/mo...alue-mean.html

...implies changes to the imputed rent rules. I am wondering how this affects my two properties abroad, specifically the unrented one. If I am renting a property to live in, in CH, and have a unrented property abroad, is that technically my "primary residence" from the concept of ownership - even if I do not reside there? If not, and it is considered a "secondary residence", then there is no change to the imputed rent?

cheers...

5
I believe you should be using net rental value so after agents fees & other expenses.

6
Thanks, fatmanfilms, yes, I do take that into account. It just strikes me as odd, when you subtract foreign assets from Swiss assets, and the final number is negative.

7
I am not sure why you are doing that, I always added foreign investments.

If you own a Swiss home there is a good chance of a negative net worth as the house will be valued for much less than was paid, possibly less than the mortgage.

8
"Sidenote: this should not be not declared in "Assets and home and abroad" section ("Auf steuerbare Vermögenswerte im Ausland", box 496 on page 4 of Zurich tax form), right ? As I read in other posts that immovable assets like apartments are not taxed, but the value is used to calculate overall wealth...is this correct? If I leave it in there, I end up with a negative overall value for "Steuerbares Vermögen im Kanton Zurich", which always strikes me as odd."

The value of real property abroad should be listed at 31.1, p. 4. The value of loans should be listed at 34., p. 4. The net value of real property abroad should be listed at 36.2 (box 496). Be sure to run the Steuerausscheidung calculation in the tax software (Private Tax). Also, the value of real property abroad is included to determine the asset tax rate for taxable assets.

Hope that assists you.