Property gains tax in Zurich: rates and tips
When selling property, you pay tax on the profits. The rules on property gains taxes vary by canton. Find out how things work in the canton of Zurich.
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1. Who is liable for property gains tax?
Anyone who makes a profit when selling a property must pay property gains tax on the profit. It is possible for the contracting parties to specify in the contract that the buyer pays this tax. However, in practice this rarely happens.
In most cases, the cantons determine and collect the tax. Sometimes, the communes are responsible for this. The amount of property gains tax charged generally depends on
the type of use
the duration of ownership
the amount of profit
In the canton of Zurich, all profits from property sales are subject to property gains tax (as a special tax). This applies irrespective of whether it concerns the sale of private or business assets.
How much is my property worth?
At Comparis, you can get an initial indication of a fair market price.
2. How much property gains tax do you pay in the canton of Zurich?
In the canton of Zurich, the tax rate is progressive. It is between 10–40%. The tax rate rises as sales profits increase. Sales profits of more than 100,000 francs are subject to a maximum tax rate of 40%.
The longer the duration of ownership, the lower the property gains tax
In addition to this basic rate, in Zurich the duration of ownership of the property is another factor that determines the amount of property gains tax due. The Canton of Zurich applies a surcharge of 50% for sales completed after less than one year of ownership. For sales after less than two years, the surcharge is 25%.
After five years, the Canton of Zurich grants a deduction of 5%. After 10 years it is 20%, and after 20 years it rises to 50%. Only full years are counted. Property gains of less than 5,000 francs on property are not taxed.
What are taxable property gains?
The basis for calculating property gains tax is the taxable profit made on the property, taking into account the duration of ownership. The taxable profit on a property is the difference between money invested in the property and the proceeds of the sale.
Investment costs include:
the purchase price, taking into account the costs associated with the purchase (property transfer tax, land registry fees and notary fees)
any value-enhancing investments (cost of new buildings and remodelling)
the usual estate agent commission and, in the case of property held as business assets, the building loan interest
Property gains tax in the canton of Zurich: table
Rates for tax calculation (Section 225 of the Tax Act) *
| Percentage | Assessment threshold |
|---|---|
| 10% | For the first CHF 4,000 |
| 15% | For the next CHF 6,000 |
| 20% | For the next CHF 8,000 |
| 25% | For the next CHF 12,000 |
| 30% | For the next CHF 20,000 |
| 35% | For the next CHF 50,000 |
| 40% | For profit of more than CHF 100,000 |
*Source (in German only): Canton of Zurich
Reduction according to duration of ownership (Section 225, para. 1 of the Tax Act)
| Reduction | Eligible duration of ownership (full years) |
|---|---|
| 5% | 5 years |
| 8% | 6 years |
| 11% | 7 years |
| 14% | 8 years |
| 17% | 9 years |
| 20% | 10 years |
| 23% | 11 years |
| 26% | 12 years |
| 29% | 13 years |
| 32% | 14 years |
| 35% | 15 years |
| 38% | 16 years |
| 41% | 17 years |
| 44% | 18 years |
| 47% | 19 years |
| 50% | 20 years and more |
Example calculation of property gains tax in the canton of Zurich
When selling a property, the seller achieves a taxable profit of 75,000 francs (difference between the purchase price and proceeds of the sale). The property gains tax payable is calculated as follows:
For the first CHF 4,000 10% = CHF 400 (10% of CHF 4,000)
For the next CHF 6,000 15% = CHF 900 (15% of CHF 6,000)
For the next CHF 8,000 20% = CHF 1,600 (20% of CHF 8,000)
For the next CHF 12,000 25% = CHF 3,000 (25% of CHF 12,000)
For the next CHF 20,000 30% = CHF 6,000 (30% of CHF 20,000)
For the next CHF 50,000 35% = CHF 8,750 (35% of CHF 25,000)
Amounts over CHF 100,000 40% = CHF 0
Property gains tax CHF 20,650
For example, if the seller has owned the property for eight years, they receive a reduction of 14%.
Property gains tax CHF 20,650
Reduction (14%) CHF 2,891
Net property gains tax CHF 17,759
3. How can I reduce property gains tax in the canton of Zurich?
There’s no way to avoid tax being charged on the sale of your property. There are, however, ways to reduce property gains tax in the canton of Zurich. You have the following options:
Claiming all deductions
The longer you’ve owned the property, the lower the tax charged. Claim all deductions: value-enhancing investments such as renovations, estate agent commissions, the cost of advertising, property transfer taxes, notary fees and any early repayment penalty charged by the bank.
Comparis tip
Create a list containing the purchase price, investment and maintenance costs when you buy a property. List all the expenses related to the property with the date and amount. This allows you to check what deductions you can claim before selling. A professional tax advisor can determine the optimum solution for you based on the complete documents.
Deferring property gains tax
Under certain circumstances, you can defer property gains tax in the canton of Zurich. This is the case with property transfers. Tax-deferring property transfers are permitted under tax law in the canton of Zurich (available in German only), including:
Inheritance, division of estate and wills
Advancements on inheritance and gifts
Transfer of property between spouses to settle legal claims
Land apportionment (except for certain exchange transactions)
Restructuring (mergers, divisions and conversions)
Sale, in whole or in part, of land belonging to the necessary operating assets with replacement purchase
Sale of agricultural or forestry land with a replacement purchase
Sale of a permanent and exclusively owner-occupied residential property (single-family house or condominium), insofar as the proceeds are used within a reasonable period for the acquisition or construction of a replacement property in Switzerland used for the same purpose.
Please note that for a deferral, the sale of the property and the replacement must be done by the same person. In order to have the effect of deferral, you may generally make the replacement purchase up to a maximum of two years after the sale.
You can find more forms, information sheets and details about property gains tax in the canton of Zurich on the cantonal website (available in German only).
This article was first published on 08.11.2022