What taxes are levied when buying a home?

One-time fees: What is due immediately upon purchase

Taxes related to buying a home can be divided into direct transaction taxes and indirect risks. Here you can find out what the government wants from you immediately.

The property transfer tax: The big chunk

The most well-known tax on home purchases is the property transfer tax. It is levied when a property changes ownership.

• The amount: In cantons that levy this tax on home purchases , the rate is usually between 1% and 3.3% of the purchase price. For a house costing 1 million francs, this quickly amounts to 10,000 to 30,000 francs.
• Federalism: Here, the Swiss cantonal spirit is clearly evident in the taxes on home purchases . The canton of Zurich, for example, has abolished the property transfer tax for residential real estate (only notary fees apply). Bern and Vaud, on the other hand, still levy it.
• The division of costs: Often, buyers and sellers split these home purchase taxes equally. However, this is a matter of negotiation and should be stipulated in the purchase agreement. In some cantons, the buyer is jointly and severally liable for the entire amount of the home purchase taxes if the seller fails to pay.

Fees that function like taxes

Strictly speaking, notary and land registry fees are not taxes on home purchases , but rather charges for a service. However, since they are often calculated as a percentage of the purchase price (per mille rate) and go to the state or state notaries , they are often included in the budget as home purchase taxes .

Together with the property transfer tax, these "ancillary purchase costs" often amount to around 5% of the purchase price . You must provide this sum as "hard" equity; it cannot be financed through a mortgage.

Pension funds and the capital withdrawal tax

Many buyers use funds from their pension fund (2nd pillar) or pillar 3a as equity. What many forget: This early withdrawal immediately triggers taxes on the home purchase .

• The mechanism: When you withdraw money from your retirement savings, it must be taxed. This is a so-called capital withdrawal tax (often at a reduced rate, separate from other income).
• The plan: This tax is due immediately. If you withdraw 100,000 francs from your pension fund, perhaps only 95,000 francs will end up in your account, because the tax has to be paid (or you have to pay it from other sources). These taxes on home purchases therefore reduce your effective equity.

The risk of capital gains tax on real estate

The capital gains tax on real estate is actually a tax borne by the seller. They pay tax on the profit (sale price minus acquisition costs). Why is it still relevant to your taxes when buying a home ?

• The lien: In most cantons, the state has a statutory lien on the property for this tax.
• The scenario: If the seller doesn't pay their capital gains tax (e.g., because they are insolvent or move abroad), the state will seize the property. This means that you, as the buyer, must settle the seller's tax debt to prevent your house from being foreclosed upon.
• The solution: These risks are therefore indirectly related to the taxes associated with buying a home . Protect yourself by transferring the seller's estimated tax amount directly to the tax office or depositing it into an escrow account, instead of paying the seller the full purchase price.

Recurring taxes after purchase

taxes change fundamentally. You go from being a renter to an owner, which makes your tax return more complex.

The imputed rental value

This is a Swiss peculiarity and technically belongs to the ongoing taxes on home purchases .

• The principle: You have to pay tax on the notional rental value of your property as income. The government argues that you are receiving "income in the form of housing".
• The effect: Your taxable income increases. However, these taxes on home purchases are usually offset by deductions for mortgage interest and maintenance payments (flat rate or actual amount). In times of low interest rates, the imputed rental value is often higher than the deductions, which effectively increases the tax burden.

Property tax and wealth tax

Other ongoing taxes related to home purchases concern the property's substance.

• Property tax: Some cantons levy an annual tax on the value of the property (often in the per mille range). This is one of the fixed taxes for homeownership .
• Wealth tax: The assessed value of the property is added to your net worth. Since real estate is often highly valued, your wealth taxes will increase. However, you can deduct the mortgage as debt. Therefore, the net impact of these taxes on homeownership depends on the amount of debt you have.

Regional differences in taxes for home purchases

The question "How high are the taxes on buying a home ?" can only be answered locally.

• Canton of Bern: Here you pay property transfer tax. Taxes on home purchases are comparatively high here.
• Canton of Zurich: No property transfer tax for residential real estate. Taxes on home purchases are limited to fees.
• Canton of Vaud: High transaction taxes. Home purchase taxes must be factored into the budget significantly.

Be sure to check with the local council or notary about the local tax rates for home purchases .

Conclusion

The question "What taxes are due when buying a property?" reveals that the state is a silent partner in every real estate transaction. The taxes associated with buying a home consist of a mix of one-off payments (property transfer tax, capital gains tax) and latent risks (the seller's capital gains tax).

Those who underestimate the taxes associated with buying a home end up with less equity than they anticipated. A rule of thumb is to budget approximately 5% of the purchase price for all fees and taxes . Furthermore, protect yourself contractually against the seller's tax liabilities. Only those who plan their home purchase taxes transparently can be certain that their dream home is financially secure.

If you want to calculate exactly how high the taxes are for buying a home in your desired municipality or how you can ensure you pay the capital gains tax on real estate, Loft offers detailed tax calculators and checklists for your planning.

Glossary

• Home purchase taxes: Collective term for all fiscal levies that are triggered directly or indirectly by the acquisition of a property (e.g. property transfer tax, capital gains tax).
• Property transfer tax: A cantonal tax levied when the ownership of a property changes. It is often the largest single tax item when buying a home .
• Capital gains tax on real estate: Tax on the seller's profit. Due to the statutory lien, it poses a risk to the buyer and is relevant for taxes on home purchases .
• Imputed rental value: A notional income that homeowners must declare for tax purposes annually. It is one of the recurring taxes associated with homeownership .
• Statutory lien: The right of the state to directly recover damages from unpaid property taxes (such as income tax), regardless of who the current owner is.