Replacement procurement in natural persons

If the proceeds from the sale of a self-used property are invested within a reasonable period of time into a new property, the real estate gains tax is deferred, as there is deemed to be a replacement acquisition. Read in our article about the conditions and deadlines that must be met and how the taxable profit is calculated.

Conditions and Deadlines

Since the capital gain of the property is not considered realized in the case of a replacement acquisition, the deferral of the real estate gains tax is granted until the final disposal. The tax deferral is granted under the condition that both the sold and newly acquired properties are permanently inhabited by the taxpayer. Accordingly, the purchase of a second home or a holiday apartment does not qualify as a replacement acquisition. Additionally, there must be a causal connection between the sale and the purchase.

The reasonable period between the sale and the acquisition of the homes is regulated by the canton and generally amounts to two years. Under circumstances, such as construction delays or if an immediate relocation is necessary for health or professional reasons, longer periods may be recognized. Delaying the sale due to an expected increase in value does not entitle one to a deferral.

Calculation of the Taxable Gain

If the replacement property is cheaper than the amount received through the sale, the question arises as to which part of the gain can be deferred. According to federal legal precedent, the absolute method is currently applied: tax can only be deferred on the reinvested part of the gain. Alternatively, one could defer the taxation of the gain proportionally to the amount reinvested in relation to the proceeds received (so-called relative method).

It is also worth noting that a tax deferral is granted for preemptive acquisitions. A preemptive acquisition occurs when the new property is acquired before the sale of the previous one.