You’ve inherited property – now what? Sell it or rent it out?
Selling the parental home can be difficult for many. Anyone who inherits a property will need to ask themselves: what to do with the property?
01.09.2022
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If you inherit a property, you can find yourself in mourning and facing estate planning issues at the same time. Comparis shows you how to claim or disclaim an inheritance and discusses some possible paths forward for dealing with the inherited property.
1. Claiming and disclaiming an inheritance
At the beginning of the inheritance process, you should first reflect on whether you would like to accept the inheritance or not. Accepting an inheritance also obliges you to take on any debts left by the deceased person. You will need to make a decision within three months of their death. If you don’t act within this period, that usually means that you’ve automatically accepted the inheritance. This deadline is critical. If it turns out later that the deceased was in debt, their heirs will become liable for that debt.
If you suspect that the testator may have been in excessive debt, you should find out about their financial situation. If you don’t receive any information from the authorities, you can request that they produce a public inventory. You will need to take this step within one month of the death. Afterwards you have four options:
Accept the inheritance unconditionally. This means you become liable for all possible debt, even if not included in the public inventory.
Accept the inheritance with a public inventory. In this case, you will only be liable for the debts listed in the public inventory.
Request that the authorities conduct an official liquidation. The inherited property will be sold, and you will no longer be held liable for debts. If there is anything left over after all debts are paid, it will be paid out to the heirs.
You disclaim the inheritance and forfeit all rights to the property. Important: if the testator gave you any financial gifts or advancements during the five years prior to their death, you may be required to pay these back to creditors.
If all heirs disclaim the inheritance, the property will be officially liquidated. If there is a surplus following the sale of the property, it will be given to the beneficiaries.
Official inventory:
The responsible authority compiles a list of the assets and liabilities associated with the inheritance. It asks all creditors and debtors to report any outstanding claims and debts within one month.
Please note: the heirs are responsible for covering the cost of putting together the official inventory. You may have to make an advance payment if the inheritance is insufficient. Compiling the inventory can easily cost several thousand francs.
2. Opening the will and applying for a certificate of inheritance
Do you know if the deceased left a will? Do you know where it is located? If so, you are obliged to submit the will to the relevant cantonal authorities. A notary is responsible for submitting a notarized copy of the will. Normally you will be informed of the content of the will one month later.
The next step is to apply for a certificate of inheritance. The assets of the deceased will remain frozen until this certificate is issued.
Certificate of inheritance:
This certificate allows heirs to take ownership of their inheritance, including property.
Multiple heirs: what to do with a shared property
Usually you’re not the only person receiving an inheritance. Together with others who have been named as heirs in the will or are legally considered as such, you will form a community of heirs. This is created automatically upon the death of the testator. If you co-inherit a property, you will be confronted with complex decisions. Would you like to jointly keep the property? Or maybe buy out the portions belonging to other heirs? In the article “Community of heirs: inheriting and selling a property” you can find out more.
3. Settling the tax and fee bill for inherited property
Claiming an inheritance involves paying various taxes and fees. What these are and how much the bill will be depends on the testator’s canton of residence.
Inheritance tax in Switzerland
In Switzerland, inheritance tax is collected at the cantonal level. There are large differences between individual cantons. The amount to be paid is calculated based on the market value of the bequeathed assets on the day of the testator’s death. This also applies to property. Normally taxes are paid to the canton in which the deceased last resided. Taxes on property, however, are paid to the canton in which the property is located.
Good to know: the closer you’re related to the testator, the lower the inheritance tax. Some cantons even exempt close relatives from this tax entirely.
The table below provides an overview of inheritance tax applicable in the different cantons in Switzerland (websites only available in the language(s) of the canton):
| Canton | Spouse | Descendant | Parent | Sibling | Cohabiting partner | Other |
|---|---|---|---|---|---|---|
| Aargau | No tax | No tax | No tax | 6–23% | 4–9% | 12–32% |
| Appenzell Ausserrhoden | No tax | No tax | No tax | 22% | 12% | Up to 32% |
| Appenzell Innerrhoden | No tax | 1% | 4% | 6% | 20% | Up to 20% |
| Basel-Landschaft | No tax | No tax | No tax | 15% | 15% | Up to 30% |
| Basel-Stadt | No tax | No tax | 5–11% | 7.5–16.5% | 7.5–16.5% | 22.5–49.5% |
| Bern | No tax | No tax | 6–15% | 6–15% | 6–15% | Up to 40% |
| Fribourg | No tax | No tax | No tax | 5.25% | 8.25% | Up to 22% |
| Geneva | No tax | No tax | No tax | 6–11% | 20–26% | Up to 26% |
| Glarus | No tax | No tax | 2.88–7.19% | 4.6–11.5% | 4.6–11.5% | Up to 28.75% |
| Graubünden | No tax | No tax | No tax | 5% | No tax | 15% |
| Jura | No tax | No tax | 7% | 14% | 14% | Up to 35% |
| Lucerne | No tax | Up to 2% | 6–12% | 6–12% | No tax | Up to 40% |
| Neuchâtel | No tax | 3% | 3% | 15% | 20% | Up to 45% |
| Nidwalden | No tax | No tax | No tax | 5% | No tax | Up to 15% |
| Obwalden | No tax | No tax | No tax | No tax | No tax | No tax |
| St. Gallen | No tax | No tax | 10% | 20% | 30% | Up to 30% |
| Schaffhausen | No tax | No tax | 2–8% | 4–16% | 10–40% | Up to 40% |
| Solothurn | No tax | No tax | No tax | 4–10% | 12–30% | 12–30% |
| Schwyz | No tax | No tax | No tax | No tax | No tax | No tax |
| Thurgau | No tax | No tax | 2% | 4% | No tax | 8% |
| Ticino | No tax | No tax | No tax | 5.95–15.5% | 17.85–41% | Up to 41% |
| Uri | No tax | No tax | No tax | 8% | No tax | Up to 24% |
| Vaud | No tax | 0.01–3.5% | 2.64–7.5% | 5.28–12.5% | 15.84–25% | Up to 25% |
| Valais | No tax | No tax | No tax | 10% | 25% | Up to 25% |
| Zug | No tax | No tax | No tax | 4–8% | No tax | Up to 20% |
| Zurich | No tax | No tax | 2–6% | 6–18% | 12–36% | Up to 36% |
Information correct as of 23 June 2021. Information subject to change.
Property transfer and capital gains tax
If a property changes hands, this triggers two tax bills: one for the property transfer tax and one for the property gains tax. If you inherit a property, you can postpone the property gains tax by simply keeping the property. Consequently, you only have to pay property gains tax once the property is actually sold. Normally you will still have to pay a property transfer tax. However, when it comes to inherited property, some cantons only tax the property transfer at low rates – or not at all.
Additional fees when claiming an inheritance
You can expect to pay additional costs and fees when claiming an inheritance. This could include costs associated with the deceased person’s death, costs for splitting the inheritance, costs for executing the will and costs for estate management by the authorities. Here is a (non-exhaustive) list of costs that you could face:
Written excerpt from the will: normally you will receive a written excerpt from the will. The costs are to be borne by the estate.
Application for the certificate of inheritance: the fee for issuing a certificate of inheritance varies depending on the case.
Creating a public inventory: the cost of putting together a public inventory can quickly run into thousands of francs. These costs are to be borne by the estate as well. If the estate cannot cover the costs, then the person who applied will have to pay.
If you inherit property, you also inherit any mortgage on it. We recommend using the Comparis mortgage calculator to check whether you are able to afford the mortgage. All running costs associated with the property are now also your responsibility. In some cases, it is also advisable to obtain a valuation on the property. For instance, this makes sense when splitting an inheritance with siblings.
4. Inherited property: move in, rent it out or sell?
After inheriting property, you basically have three options:
Live in it yourself: think about whether the property you inherited fulfils your needs for living space and whether you can afford the mortgage, amortization and maintenance.
You rent the property out: if you want to move into the apartment or house at some point in the future, it makes sense to rent it out in the meantime. Generally, property is also a safe investment. You can determine the expected annual rental income by comparing the inherited property with similar rental properties in the area. Don’t forget to subtract ongoing maintenance costs and to budget a reserve for bigger renovation projects. Incorporate these factors into your calculation to determine the actual return on the property. Important: returns on single-family homes are often modest, and letting them out involves quite a lot of work. If you want as little involvement as possible with the inherited property, it’s best to put it up for sale.
Selling the property: selling the property is a good solution, especially if you could use the financial relief. It also makes sense for properties shared by multiple heirs where no one is able to buy out the other parties. In this case, you need to consider both the market value of the home and any property taxes you may owe when selling it.
Find out what your property is worth
With the online property valuation tool, you can have the value of your home estimated free of charge and get an initial idea of a fair market price.
This article was first published on 01.09.2013