Buying a holiday home in Switzerland: what you should know
Special guidelines apply to the financing of a holiday home. Comparis explains the five most important points.
19.04.2022
iStock / Marcus Lindstrom
1. What should I know about mortgages on holiday homes in Switzerland?
You can usually finance up to 50-70% of the value of a holiday house or apartment using a mortgage. This means that you need a deposit of 30-50%. You can therefore see that stricter rules apply to mortgages for holiday homes than for a home that you will live in yourself.
2. How much do I have to repay?
The repayment (or amortization) conditions applying to holiday homes are stricter than those applying to main homes.Depending on the lender, you must pay off at least 35-50% of the mortgage for a holiday home within 15 years or by the time you reach statutory retirement age.
3. Can I use pension savings to buy a holiday home?
You can use pension savings for the purchase of a home if it will be your main residence. Early withdrawal of retirement savings is not permitted for the purchase of a holiday house or apartment.
4. What should I be aware of when building a holiday home?
In 2012, Swiss voters accepted an initiative to limit the construction of second homes. It was then enshrined in the Swiss Federal Constitution that the proportion of second homes in any municipality may not exceed 20% of the total housing stock. The ordinance of the Federal Council came into force in 2013.
Before building a holiday home, clarify the following:
Is the holiday home to be constructed a second home by definition? Second homes are those that are not used permanently or for the purposes of work, studying or training or to be let out to tourists.
Is the municipality in which the second home is to be built subject to the Second Homes Ordinance of 22 August 2012? (in German, French and Italian only)
You can obtain more information from the municipalities, the Federal Office for Spatial Development (ARE) and legal authorities.
5. How high are maintenance costs for a holiday house or apartment?
Remember that a holiday home will incur various costs on top of mortgage interest, just like your main residence does. The information that follows below is based on this example:
3.5-room holiday apartment in 7165 Brigels (GR)
New-build
Purchase price: CHF 900,000
Here is a breakdown of the costs associated with a holiday property:
Renovation fund
In the case of holiday apartments, each unit – as is usual with condominium ownership – pays a fixed annual amount into a renovation fund. It is used for general renovation work to the building (e.g. replacing the roof).
As a rule of thumb, a total amount of around 0.5% of the building insurance value should be paid in per year. Assuming, for instance, a building insurance value of 4.2 million and that the building is divided into 6 units each having a similar co-ownership share, the annual cost for each unit will be around 3,500 francs.
Shared ancillary costs
Normally, the homeowner association sets up another fund or account (maintenance fund) to cover shared ancillary costs (e.g. caretaker, lift maintenance etc .). The amount to be contributed by each unit is also based on the co-ownership share. You should expect to contribute around 0.3% of the purchase price for this – 2,700 francs for the example property.
The task of overseeing the general management of the building and drawing up the annual accounts is usually entrusted to a trust company. For this, you need to add another 0.2% of the purchase price – that is, around 1,800 francs.
Non-homeowner association maintenance costs
In addition to the costs mentioned, you should also put aside some money for renovations within your own living space.
As a rule of thumb, you should budget around 0.3% of ancillary costs per year (calculated on the basis of the purchase price). This is around 2,700 francs per year for a purchase price of 900,000 francs.
Tax on holiday homes
You have to pay tax on the imputed rental value in the canton of the holiday home. In the canton of Graubünden, the Office for Property Valuation calculates the imputed rental value. Although you can deduct maintenance costs and mortgage interest from this amount, there will generally be an amount remaining. This amount is then taxed at cantonal and local rates. For the purposes of tax calculation, the rate-determining income at the tax rate of the main residence applies.
Many tourism-driven municipalities in the canton of Graubünden levy a visitor and tourism tax. If you only want to use your holiday apartment yourself, you usually pay a flat-rate visitor tax based on the size of the property for the apartment and a tourist tax for the overnight stays. Depending on the destination, these taxes can add up to over 1,000 francs for a medium-sized apartment.
Summary of additional costs
The following costs (in CHF) apply to the holiday home in the example:
| Renovation fund | 3,500 |
|---|---|
| Shared ancillary costs including administration | 4,500 |
| Maintenance of own living space | 2,700 |
| Taxes* (cantonal/local) plus additional tax due to imputed rental value (minus mortgage interest) and fees | 1,300 |
| Total | 12,000 |
* Rough estimate, as the value depends heavily on the residency, amount of debt and total income.
The total annual cost for the example holiday home is therefore 12,000 francs.
Have you considered all aspects and now want to buy a holiday home in Switzerland? Compare mortgage rates to save money when it comes to financing your purchase.
This article was first published on 21.06.2012