Hi All
we purchased our house about 5 or so years ago but are thinking of moving somewhere else in CH, however i dont know if i want all of the hassle right now of selling / buying and all of the stress of finding a buyer etc...
Has anyone rented out their primary residence and rented elsewhere in CH perhaps in the same or neighbouring Kanton? Im wondering what the things i need to be aware of such as paying taxes, agency fees, and if i need to inform my mortgage lender etc...
As long as i break even I dont mind but if im going to be at a loss, then it may not be worth while
If you are Swiss or C permit, no problem moving to another canton. Other permits more difficult.
In order to rent your property to other people, you need permanent residence - which generally means a C permit or Swiss citizenship.
Thanks but that wasn’t really what I was asking. I’ve lived here for 12 years and have citizenship. It’s more about taxes, costs and other consideration
Apologies for being vague but there isn't there also something that if you pledged your second pillar to buy the property it needs to be your main residence?
There was something in our mortgage about pledging paying to our 3rd pillar yes that’s correct. I think, although could be mistaken, that it was more about making sure this was done yearly.
I asked the same question a few years ago. The big problem is your mortgage lender (assuming you have one). Mine basically said 'no' but others remarked that you'll almost certainly have to increase your cash stake in your property.. maybe upto 50%. Add to that the legal fees for setting everything up... hardly worth it.
It's only the 2P that matters for limiting rentability.
Tom
When we bought on B Permits we were told the mortgage will have to be moved to he EU partner and the Pillar 2 withdrawals would have to be re-paid.
15 years on and now Swiss on paper, when we wanted to rent out the house there was no need to re-pay the 2nd Pillar, no need to bring more money (the 13% original down payment and 3rd Pillar repayments were enough) and we were surprised that we no longer needed to make re-payments.
Tax-wise, assuming you move within the same Kanton, it will be more tax if you rent above the Eigenmietwert amount or less if you rent below plus any agency fees. If you move Kanton, the tax rates will be based on the Kanton you live in.
You didn't specify that you were a citizen in your original post, and in the past people have asked the same question while on B or L permits - and the permit issue stopped them from being able to legally rent out their property to others.
You can only withdraw and use your 'company' pension to help fund the ownership of where you live not for any 'investment' like renting out. It's years ago since someone on EF pointed this out to me, saving me a lot of hassle at the time and for which I am eternally grateful.
We also gave this idea some thought some years ago. The house we owned had been rented for a long time before we bought it. So we thought we'd test that market. The numbers just made no sense. We weren't going to use an agency.
If your house no longer suits your needs, then you might be better off selling because renting it out is possibly far more work. Rental income is taxable. You can deduct the maintenance and repair costs.
Selling is also going to take some effort whether you use an agency or not. Once sold then you are no longer responsible for the upkeep. It sounds that if you rent out your current house you will go from owners to tenants yourselves and this is not an easy transition.
The mortgage term and interest rate could also affect your decision to sell, especially if you do not intend to buy immediately.
If it is a question of wanting to move back into the house in the future, then obviously renting it out would make sense but then you need to be very clear in the rental contract about the conditions (fixed term, i.e. 5 years). Otherwise you might get tenants who never want to leave!
Selling after 5 years is not necessarily the norm in Switzerland but people do (we have, more than once). You main residence is not exempt from capital gains so this is also something to take into consideration.
I am in the same boat, looking at renting the house we bought to move to another area.
Our LTV is already around 50%, we have a fixed rate which is quite attractive in this current enviroment.
The only worry will be if the mortgage provider demands we pay another rate based on the property changing to an "investment" property (my wife is Swiss and all paperwork in her name). There is nothing mentioned in our mortgage contract about this so I wonder if anyone has had experiences?
I will be contacting our lender shortly in any case
Yes I think we might do this and just sell instead.
The capital gains, as per my am tax accountant is only relevant if I downsize however moving to a same property price or higher means a no CGT
Does anyone have a rough idea of moving costs? I can only think of a few
Agency fees ~1.5% of sale price - so on a property of 1M : 15K
Notery fees ?
Cleaning fees : 1.5K
Mortgage change fees?
Anyone recently moved ~ sold & purchased?
Each Canton has different rules, but if you sell look at a commission nearer 3% plus VAT.
We've mortgages with several of the big banks and never had a problem with them in renting out and never have they asked to increase the interest rate because we rent.
If you use an agency, you'll pay them about 10% but they will handle everything for you - including the rental deposit.
Currently you should aim for a rental yield of about 3% of the realistic market value. More if you can, but not less. Institutions are now looking at 3.5 -4% yields.
The rental income will be added to your income, but you can deduct costs, commissions etc. Any capital spending will be carried over till you sell, then it can be deducted from your gain for CGT purposes.
It's really not a big deal and how I started to build my property portfolio. Started with one property, found another we liked more so bought it, rented out the original one and moved in - and so on. Some we sold, bought again, etc. My wife's second pillar secured the mortgage on the second one and it's still there and the bank has never asked for it to be repaid or ever increased the interest rate. (Apart from when the fixed term expired, but till now we remortgaged at lower rates, but this will change of course at the next term expiry due to a general increase in rates).