Imputed rental value of a foreign property

If you own a property abroad, you do not have to pay taxes on it in Switzerland. However, the property must still be declared in the Swiss tax return, because the calculation of taxes includes your worldwide income and assets. You will learn how foreign real estate is appraised in this blog post.

Tax value of a foreign property

An example: a Zurich couple buys a holiday apartment in France. The tax value of the property is CHF 50,000. In the Swiss tax return, the couple must declare the tax value of the property as assets and the imputed rental value, minus maintenance costs and mortgage interests, as income. The tax value is calculated differently in each canton. In the Canton of Zurich, the tax value is 70% of the purchase price.

Calculation of tax rate

The couple's total assets of CHF 150,000 are thus taxed at a tax rate of CHF 200,000 (CHF 150,000 + CHF 50,000). The same principle also applies to income tax. It is important to note that taxes in Switzerland are calculated progressively. Thus, the tax rate for CHF 200,000 is higher than for CHF 150,000.

Imputed rental value

The imputed rental value of self-occupied properties is subject to income tax. It corresponds to the amount a tenant would have to pay if the property were rented out. While the owner does not receive monetary income from rental earnings if he occupies the property himself, the benefit is credited to him as income.

The calculation of the foreign imputed rental value varies from canton to canton. In the Canton of Zurich, the imputed rental value for a foreign family house is 3.5% of the tax value and for a condominium, it's 4.25%. If the property was rented out, the actual rental income (excl. utility costs) must be declared.

Calculation of tax rate

The Zurich couple has a total income of CHF 100,000. The imputed rental value of the holiday apartment in France is CHF 15,000. Therefore, the Swiss income of CHF 100,000 is taxed at the rate of CHF 115,000.

Tax optimization

It is possible to reduce the imputed rental value by deducting maintenance costs. A lump sum deduction, which ranges from 10% to 20% of the imputed rental value, can be claimed. If the actual costs exceed the lump sum deduction, these can also be deducted.