Implications of converting a primary residence to rental property in Canton Zurich

Accomodation, House and Garden
1

Consider a situation where I bought a property to live in 1 year ago, paying down 20% using pillar 2 for 10%, pillar 3 for 4% and cash for the rest.

This is in Canton Zurich, for an EU citizen on C-permit (is there any difference if you’re on a B-permit?)

What happens if I want to convert this property to a rental and move to a rental property elsewhere in the Canton (different municipality).

Will I have to repay my pillar 2/3 withdrawals?

Thanks for the feedback.

2

To cover all cases, here is the list (some may be canton dependent):

  • First you may need authorization to switch from home ownership to landlord in the first x (typically 10) years after buying. So what you are thinking may not even be possible. But as an EU with C permit, not an issue
  • It may not be possible according to the secondary home laws (probably not applicable in Zurich).
  • You will need to reimburse pillar 2, and perhaps increase your share of the property from 20% to 33% or even 40% depending on the bank. They will also have to reassess your financial capability, as now more expenses (rent) and income (rent)
  • PS: A lot depends on the length you owned the property. Usually it takes 10 years living in your home for all the ‘benefits’ to ‘expire’ and you are more free to do whatever you want. One year is too short, you should expect the full rules for buying a rental property in the first place to apply. You have to review the terms of what you signed.
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3

Thanks, my life situation changed and now I am seriously considering whether I should be staying in an oversized apartment or not.

Alternatively I could sell it I suppose, this would perhaps be simpler. In this situation I’d also need to repay pillar 2/3. Well, I’ll be thinking about this for some time.

4

On the bright side, the huge gain tax won’t hit you much just after a year, i.e. just 1 year lost, much better than 3-5 y where in theory your investment worked but the gain will go to the taxmen

5

A percentage of the gain will go to the taxman.

6

Maybe you could sublease a room? I am not legal expert, but that would mean you still have your primary residence there, no?

7

Had the same question answered many years ago on the old forum. You can’t use your ‘pension’ money to fund an investment of any kind, including a property producting rent. You have to pay back the pension before you can rent out the property.