In Switzerland, few can boast of having realized the dream of becoming a homeowner. Constantly rising prices, as well as difficulties in obtaining financing, are major factors.
In fact, the numbers speak for themselves! Only one-third of Swiss people own their homes, which is simply one of the lowest rates in Europe.
What are the barriers to overcome?
- Significant initial capital contribution
- Restrictive eligibility conditions
- Rigid legal framework
- Coordination of various parties involved (broker(s), notary, bank, ...)
- Reserved for insiders
And then?
Once the coveted property is found, the necessary equity gathered, financing obtained, and the sales contract signed at the notary's office, it is important not to fall into the mistake of thinking the hardest part is behind you.
Indeed, buying real estate can, in many ways, be compared to buying a car. It’s not just about purchasing it, but maintaining it will unquestionably be essential if you want to preserve its value or extend its lifespan.
The amounts to invest can be considerable (examples: roof repairs, upgrading a heating system, etc.). A proactive approach, generally reflected by a investment strategy, is therefore highly recommended. The risk of finding yourself in a difficult situation (such as a cash flow shortage) can thus be significantly reduced, and alternatives considered/studied.
Moreover, acquiring real estate automatically opens the door to a particular tax status. Therefore, beyond the purely “technical” aspect of maintenance, the tax aspect must be taken into account when developing an investment strategy.
Indeed, the counterpart to taxable income generated by a property, whether imputed (rental value) or actual (rental income), is, among other things, the ability to deduct maintenance expenses. Regulations regarding the deduction of maintenance costs related to private properties offer several possibilities. A flat-rate deduction may be allowed without proof, up to a given percentage. However, this percentage, calculated on the rental value, can vary depending on the age of the property and may be excluded in certain cases when rental income exceeds a certain limit. If the flat-rate deduction is excluded or less advantageous, the actual expenses method with supporting documents applies.
It thus becomes clear that this aspect must be taken into account when developing a strategy, in order to smooth/manage maintenance costs with a view to tax optimization.
Key Takeaways
It is important to be supported by professionals in every investment solution.
