Property gains tax in the canton of Lucerne: how it works
When selling property, you pay tax on the profits. The rules on property gains taxes vary by canton. Find out the rules in the canton of Lucerne here.
13.12.2022
iStock / xbrchx
1. Who is liable for property gains tax?
If you make a profit on the sale of a property, you owe the respective canton property gains tax. The profit on the property is the difference between the proceeds collected from the sale and the capital expenses
Profit on the property = proceeds from the sale – capital expenses
The capital expenses include:
The purchase price of the property at the time
Expenses for notary fees and land registry fees
Estate agent costs
Value-enhancing investments
The amount of the property gains tax depends on how the property is used, how long it was held by the previous owner and the amount of profit generated from the sale.
2. How much property gains tax do you pay in the canton of Lucerne?
A dualistic system is used in the canton of Lucerne. Consequently, only profits on private property are subject to property gains tax.
The profit from the sale of commercial property (partnerships, sole proprietorships or corporations) is recorded for income or profit tax.
Generally, trivial profits are not taxed. The assessment limits differ in each canton; in the canton of Lucerne, this allowance is the highest of all cantons and amounts to 13,000 francs. For comparison: in the canton of Basel-Stadt, only profits of up to 500 francs are tax-free.
Property gains tax in the canton of Lucerne: calculation
First, the basic tax according to the income tax rate for single persons (available in German only) is calculated for the taxable property gain. The remaining income is not taken into account in this step. This amount must then be multiplied by the tax rate of 4.2 applicable to all communes.
The longer the property is owned, the lower the tax
If the property has been owned by the seller for less than six years, the increase in the tax amount declines by 10% with each full year. However, the tax may not exceed 40% of the property gain.
If the property has been owned by the seller for more than eight years, the tax amount for each additional full year is reduced by 1% – but by no more than 25%.
Example of calculation of property gains tax in the canton of Lucerne
The property in this example calculation was owned by the seller for 16 years.
Purchase price CHF 1,000,000
Value-enhancing investments CHF 30,000
Sales price CHF 1,150,000
Selling costs CHF 20,000
(estate agents, listings, etc.)
Profit on the property CHF 100,000
Simple tax according to the table CHF 4,204
Simple tax × tax rate of 4.2% CHF 17,656.80
Deduction for the duration of possession (8%) CHF –1,412.55
Total property gains tax CHF 16,244.25
The tax authority of the canton of Lucerne provides an online calculation tool (available in German only).
Profit amount determines the tax amount
As the above example shows, the sale price and the profit generated by the sale are decisive for the calculation of the property gains tax.
Comparis' online property valuation gives you a first clue to the potential market value of your property.
3. How can I reduce property gains tax in the canton of Lucerne?
There’s no way to avoid tax being charged on the sale of your property. There are, however, ways to reduce or defer property gains tax in the canton of Lucerne. You have several options to do this:
Claiming all deductions
The higher the capital expenses, the lower the profit on the property. So, claim all the deductions you can. These include value-enhancing investments such as renovations as well as estate agent commission, the costs of advertising the property, property transfer taxes, notary fees and early repayment charges paid to the bank.
Comparis tip
When you buy a property, you should create a list containing the investment and maintenance costs. Here you should list all expenses related to the property, including the date and amount. This allows you to check what deductions you can claim before selling.
Deferring property gains tax
Taxation is deferred under certain circumstances in the canton of Lucerne. This means that the tax is not due until the next taxable sale.
Reasons for such a deferral include:
The property changes ownership through inheritance, an inheritance advance or gifting
The property changes ownership between spouses/registered partners, provided that both spouses/registered partners agree
An owner-managed agricultural property is sold, provided that the proceeds from the sale are used for a replacement agricultural property two years before or after the sale.
An owner-occupied residential property is sold and the proceeds of the sale are reinvested into a replacement owner-occupied property located in Switzerland two years before or after the sale.
You can find more forms, information sheets and details about property gains tax in the canton of Lucerne on the cantonal website (in German only).
This article was first published on 13.12.2022
