Making a Bank via Lease in Switzerland

According to the analysis from last December by Global Property Guide, the profitability of renting out housing in the country is low. For example, in Zurich, you have to pay about €1.45 million for a middle-class apartment with an area of 120 sq.m in a residential area, in Geneva it is €1.38 million. You can rent such an apartment for €3,946 and €3,827, respectively. Therefore, the annual rental income will be 3.27-3.33%.

A foreigner who has a residence permit in Switzerland has the right to rent out the purchased property both for shorter and longer period of time. 

Non-residents of the country can only buy and rent out real estate that is listed as a second residence ("Zweitüsitz"), or apartments/chalets that fall under the category of "tourist commercial real estate". In the latter case, the management is usually handled by a Swiss travel company.

We will talk about long-term rental rates later. As for short-term rental rates, for example, through AirBnb, the cost of a day in Zurich starts from €100, in Geneva - from €90 for studio apartments.

If we talk about two-bedroom business class apartments within walking distance from the lake or the city center, prices start from €250 per night in both cities.

Taxes

Income tax. Local authorities assume that a foreign citizen acquires property in order to rent it out. Therefore, even if you decide not to rent the purchased house or apartment, you will have to pay tax on the potential rental income.

BUT! The minimum time for tourist rentals specified in the law is 183 days. Moreover, the same tenant can not stay in such housing for more than 90 days. So for almost six months, you are free to use the property yourself. In any case, this is the maximum time that a foreigner can spend in Switzerland without a residence permit.

In this case, the conditional rent for which the object could be rented is taken as a basis, and income tax is calculated from it. Plus, you can deduct all expenses related to the care and improvement of housing from the potential income: repairs, maintenance, insurance fees, investments in improving the energy saving of the house, environmental protection, etc.You can also deduct interest on debts, even if they do not directly relate to this object.

Income tax is paid at two levels: federal and cantonal. In the first case, a progressive rate is applied, which starts at 0.77% and does not exceed 11.5%. Moreover, if the annual income is lower than €13,460 for one person or €26,270 for a couple, you do not need to pay federal income tax.

In the second case, the rates vary greatly depending on the specific location and are 14-32%.

Companies that rent out real estate in Switzerland, after the reform on January 1, 2020, pay a total income tax of 12-21%, depending on the amount of income and on the specific location.

Let's say you live in an upscale apartment with an outdoor rooftop terrace, panoramic views, near Lucerne or Locarno. You can rent such housing for €5,600-6,000 per month. Thus, the amount of annual taxes for such a property will be about €14,000 - 18,700. Therefore, most foreigners prefer to rent out property purchased in Switzerland and live in rented apartments, it is more profitable.

Feature 1. There are several interesting options for non-resident investors who want to buy a property in Switzerland for personal use. For example, under the Swiss law, mortgage payments (interest and additional expenses) for private real estate are deducted as expenses when filling out a tax return. If you correctly combine a loan (a maximum of 40% of the real estate price) and the deposit of securities, you can not only reduce the tax on imputed income to zero, but even get a higher profit than mortgage interest rates.

Feature 2. Without a good knowledge of German, French or Italian, it will not be easy to fill out and file a tax return correctly. Therefore, you will need the help of a Swiss tax attorney, who charges €1,000 for a simple real estate declaration.

3 000 000 €

Apartment in Montreux, Switzerland

200 m² 3 2 2

Online Viewing Remote Transaction

Exquisite Luxury Apartment with High Ceilings and Stunning Panoramic Views of the Picturesque Montreux Waterfront AUTHORIZED FOR SALE TO NON-RESIDENTS Key Features of the Property: 2 Bedrooms, 2 Bathrooms: This apartment features two spacious and elegantly designed bedrooms. The two modern bathrooms are equipped with high-quality materials...

Victoria Gaillard sarl

51 700 000 €

Commercial property in Geneva, Switzerland

30000 m²

Switzerland. Geneva. Shopping mall. This shopping mall offers high occupancy rates and growth potential, with indexed leases. Rental income of approximately CHF 2.38 million per year. Askful price: CHF 47 million Yield of approximately 5.1%. Information available after signing an NDA. We will sell your apartment or house. We have a...

Europe Gmbh

5 992 000 €

Commercial apartment building in Lugano, Switzerland

900 m²

Switzerland. Lugano. Viganello. New apartment building. Yield: 4.4% 7 apartments. 7 parking spaces. Price: CHF 5,600,000 We will sell your apartment or house. We have a selection of apartments and houses for various budgets, including commercial properties.

Europe Gmbh

2 500 000 €

Hotel in Switzerland

8 m²

This well-groomed 3-star hotel with 8 cozy and comfortably equipped rooms is an ideal place for holidaymakers, active tourists and business guests. Whether your guests are planning a short weekend or a long stay, peace, nature and a high level of comfort await them. Basic information about the facility: Total area: about 508.95 m2 Number of...

Immotrading GmbH

4 200 000 €

Flat in Montreux, Switzerland

220 m² 4 3 2

Rental property

Exclusive apartment with panoramic views of Lake Geneva and five-star hotel service In the heart of Montreux, in a prestigious residence Le NationaleIt offers exceptional apartments combining elegance, comfort and a privileged lifestyle on the Swiss Riviera. The residence is just a few steps from the famous embankment of Lake Geneva, the...

Victoria Gaillard sarl

31 000 000 €

Hotel in Valais, Switzerland

1000 m²

A chalet in the Swiss ski resort of Crans-Montana. An ideal property for your own use with the opportunity to receive friends and family in a cozy atmosphere, as well as for use as a hotel. In the Chalet: - rooms with balconies overlooking the mountains - shared terrace - fireplace in the living room - elevator - swimming pool -...

Estate-Service24

15 000 000 €

Chalet in Arosa, Switzerland

370 m² 8 5 6

A chalet in the Swiss Alps offers comfort, prestige and a reliable investment. The area is about 370 sq.m. Bedrooms - 5 Bathrooms - 6 The chalet occupies three heated levels and offers the highest level of comfort and elegance. The south-facing location of the chalet offers spectacular views of the surrounding mountain landscape. In...

Estate-Service24

1 391 000 €

Commercial apartment building in Locarno, Switzerland

600 m²

Switzerland. Locarno. Rivera. Apartment building. Yield: 4.8% 4 apartments. 12 parking spaces. Price: CHF 1,300,000 We will sell your apartment or house. We have a selection of apartments and houses for various budgets, including commercial properties.

Europe Gmbh

87 000 000 €

Villa in Graubunden, Switzerland

1100 m² 6 8

In one of the most prestigious locations in St. Moritz, with a panoramic view of the lake, there is a unique residence embodying a rare combination of architectural monumentality, privacy and exceptional style. The majestic villa is seamlessly integrated into the Alpine landscape and offers breathtaking views of the lake and mountain peaks.

Estate-Service24

3 500 000 €

Flat in Lugano, Switzerland

185 m² 5 3 3

Luxury apartment with panoramic lake views in the heart of Lugano! We offer for sale an exclusive 5-room apartment located in one of the most prestigious areas of Lugano. This property combines classic elegance with modern amenities and breathtaking views of Lake Lugano and the surrounding Alps. Features and benefits: Layout:...

Estate-Service24

3 339 000 €

Commercial apartment building in Ticino, Switzerland

1700 m²

Switzerland. Ticino. Giornico. Apartment building. Built in 1970. 17 apartments. 8 parking spaces. 2 garages Yield: 5% Price: CHF 3,150,000. We'll sell your apartment or house. We have a selection of apartments and houses for various budgets, including commercial properties.

Europe Gmbh

5 243 000 €

Commercial apartment building in Lugano, Switzerland

2000 m²

Switzerland. Lugano. Lamone. Apartment building. Completely renovated. Yield: 4.6% 12 apartments. 2 commercial premises 19 parking spaces. Price: CHF 4,900,000 We will sell your apartment or house. We have a selection of apartments and houses for various budgets, including commercial properties.

Europe Gmbh

Price on request

Mansion in Vaud, Switzerland

550 m² 7 8

The modern mansion is located on the outskirts of the village of Viches, a few minutes from the towns of Gland, Nyon and the main motorway exit. The house is located in the center of a magnificent park of approximately 25,000 sq. m. m. Thanks to the combination of high-quality modern renovations and carefully preserved antique interior...

NF Group

2 568 000 €

Commercial apartment building in Locarno, Switzerland

700 m²

Switzerland. Bignasco. Apartment building. Yield: 3% 6 apartments. 12 parking spaces. Price: CHF 2,400,000 We'll sell your apartment or house. We have a selection of apartments and houses for various budgets, including commercial properties.

Europe Gmbh

4 450 000 €

Apartment in Montreux, Switzerland

225 m² 5 4 3

Luxury 5 bedroom apartment in the heart of Montreux Located in the center of Montreux, this spacious high-floor apartment combines modern comfort with stunning views. The total area is 225 m2, plus a balcony of 25 m2. The apartment has four bedrooms, three of which are master suites with private bathrooms, which ensures maximum comfort and...

Victoria Gaillard sarl

4 815 000 €

Commercial apartment building in Locarno, Switzerland

1700 m²

Residence

Switzerland. Locarno. Losone. Apartment building. 9 apartments. Yield: 4.3%. Year built: 1975 7 parking spaces 6 garages Price: CHF 4,500,000 We will sell your apartment or house. We have a selection of apartments and houses for various budgets, including commercial properties.

Europe Gmbh

Price on request

Flat in Montreux, Switzerland

198 m² 6 4 2

Rental property

Beautiful 5-bedroom apartment in the center of Montreux overlooking Lake Geneva and the Alps. The heart of the city. Shops and public transport are within walking distance. Planning: The apartment includes: - Hallway - Large living room with open fully equipped kitchen and access to the balcony - 4 bedrooms - Bathroom with...

Victoria Gaillard sarl

4 021 518 €

Villa in Lugano, Switzerland

289 m² 5 4 3

Online Viewing Remote Transaction

Designer villa with panoramic lake views, indoor pool, plot of 1186 m² and expansion potential up to 300 m². Rif.1022 In the prestigious municipality of Collina d'Oro, in the Montagnola area, we offer a villa with open views of Lake Lugano, an indoor pool and the possibility of further development of the property. The house was designed by...

Il Globo Real Estate Lake Como

49 500 000 €

Commercial property in Geneva, Switzerland

25000 m²

Switzerland. Geneva. Office and commercial center. Mixed-use office and commercial property with additional development rights. Rental income: approximately CHF 2.54 million per year. Asking price: CHF 45 million Yield: approximately 5.6 percent. Information available after signing an NDA We will sell your apartment or house. We...

Europe Gmbh

39 000 000 €

Hotel in Luzern, Switzerland

5000 m²

Residence

Switzerland. Hotel on Lake Lucerne. 4 stars. 40 rooms. Price: €39,000,000. Information available upon receipt of LOI and NDA. We will sell your apartment or house. We have a selection of apartments and houses for various budgets, including commercial properties.

Europe Gmbh

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Benefits. If you live permanently in Switzerland, i.e. you are a resident of the country, you can deduct the following types of expenses when filling out your tax return:

• Gewinnungskosten – the amount you spend to earn. That is, the cost of working life: clothing, transportation, tools, computer, etc.
• Mortgage interest (this case applies to non-residents as well-loan expenses can be deducted from the profit from tourist rentals before paying taxes);
• insurance costs;
• expenses for children;
• the cost of additional education related to your employment (the cost of training seminars, special literature, living expenses and travel, if you do not receive education remotely).

Special tax treatment for wealthy foreigners. Applicable only to Swiss residents. If you are a very wealthy person by Swiss standards, a separate tax regime is provided for you – lump-sum taxation (lump-sum taxation). This means that the annual tax is calculated in relation not to assets and income, but to the potential expenses for the daily needs of your family. Officially, this tax regime is called "taxation according to expenses" (Besteuerung nach Aufwand).

There is no fixed formula for calculating this tax – the exact amount is determined by the canton in which the foreigner intends to live.

Management companies. If you do not have the opportunity to deal with real estate issues on your own, you can contact one of the many management companies. Depending on the presence/absence of tourists and the amount of income, the rate for services varies from 10-12% to 25% of the profit.

Employees of such a company take on the payment of utility bills, search for tenants, solve mutual settlements with them, monitor the condition of real estate, etc.

By the way, the final cleaning when moving completely falls on the shoulders of the tenants in Switzerland, it is customary for the housing to be completely cleaned and cleaned during eviction. It is almost impossible to cope with this task on their own, because residents hire a cleaning company and pay about €800-900 for the final cleaning.

Quoting conditions of Prianproperty.com materials