Guide to Buying a Property in Switzerland
For most people, when they think about where to purchase a holiday home, their dream location is usually Switzerland. Whether you’re looking for a holiday home or even a permanent residence, Switzerland has a lot to offer.
However, to someone who is looking to buy property in Switzerland, the housing market can be very confusing. As this country is a confederation of 26 cantons and it has a highly regulated and complex property market, foreign buyers can often be confused about how exactly to buy property here.
This is why we’ve created this guide for anyone whose dream it is to own property in Switzerland.
Why should you buy property in Switzerland?
Switzerland is a country known for its stability and great quality of life, which is why many people consider Switzerland to be the ideal place to own property.
There are some communes in Switzerland where over 20% of the housing stock comprises second homes. For this reason, a restriction has been set in place for the construction of second homes.
Developments with building permits that were granted before 11 March 2012 are being built at the moment, but after these constructions are completed, there will be no more new-built second homes available.
So if you’re looking to purchase new property in Switzerland, now is the perfect time to do so.
Can foreigners buy property in Switzerland?
The simple answer to this question is yes, but it’s important to note that there are strict restrictions imposed on foreigners who are looking to buy property here. Firstly, unless you are a Swiss or have a Swiss Residence permit, you can only buy a property in tourist areas, not in big cities like Geneva, Zurich, or Basel.
If you are an EU or EFTA national with a Swiss residence permit currently residing in Switzerland or hold a Swiss C Permit, you have the same rights to purchase property as a Swiss citizen. This means you can purchase a primary residence but also investment properties, commercial residence, and holiday homes.
If you hold a Swiss B Permit, however, you’re only allowed to purchase the property you will live in.
If you don’t belong to any of these categories, you might not be able to purchase property, or you may buy it but only if you apply for a license to purchase. This licensing varies from canton to canton, but you have the biggest chance to get approved if you’ve been settled in your preferred canton for five or more years and are looking to purchase a primary residence.
For those looking to live, work, and retire in Switzerland, the easiest way to buy property here is to apply for and secure a residency permit.
What property can you buy?
Foreign buyers can only purchase residential property located in a tourist area. This means you can buy an apartment or chalet for sale in ski resorts located in Cantons Bern, Graubünden, Obwalden, Uri, Vaud, and Valais.
If you’re looking to purchase a holiday home, it can’t have more than 250m2 of living space (this doesn’t include the garage, basement, etc.). The property also can’t be on a land plot larger than 1000m2.
In addition, two siblings or a parent and child that’s over the age of 20 and has their own income stream can purchase a larger property together.
What is the process of buying property in Switzerland?
Buying property for sale in Switzerland isn’t a quick process, as it can last for three or more months. Wherever you choose to buy property, the process will be the same regardless of whether you found the perfect Verbier real estate for sale or chose a unique location.
Once you choose your ideal property, the first step is to make an offer after consulting with an agent. After that, the rest of the process can begin.
Signing a reservation contract
If you’re purchasing a new property or renovating an existing one, you will be asked to pay a small deposit and sign a reservation agreement. This practice also exists for resale properties and is seen as a gesture of goodwill.
The vendor or developer will countersign this contract as well and the property you’ve chosen won’t be marketed to other potential buyers while you go through the rest of the steps in this process.
Applying for a mortgage
You can apply for a mortgage to purchase a property in a Swiss bank, and most banks will lend up to 70% of the purchase price. It’s best to only work with local mortgage providers who are familiar with the area in which you’re planning to buy a property.
When you secure a mortgage offer, you will be appointed a Swiss notary who will act on behalf of the vendor and purchaser to manage the sale. As the public notary will act on behalf of both parties, you won’t need a solicitor who will act on your behalf.
Applying for a foreigner purchase permit
The first thing your notary will do is collect all the necessary information which includes the buyer’s personal info, the key information regarding the property, and the vendor’s personal info. They need to do this so they can prepare an application for a foreigner purchase permit and the deed of sale.
When that step is completed, the notary will send the application for the foreign purchase permit to the Cantonal Authorities for ratifying. This process usually lasts between two and four weeks, and it can be refused only if you already own a property in Switzerland or if the property you’re trying to purchase doesn’t comply with the rules.
Signing the deed of sale
When you secure this permit, you have a deadline of 30 days to sign the deed of the sale. You can do this yourself accompanied by the notary or sign a power of attorney. Your notary will also be in contact with the bank during this process to ensure the registration of your mortgage.
Registration and handover
Finally, the sale of the property will be documented in the Land Registrar. This is also a process that lasts for a few weeks and the sale is formally complete only when it’s finished.
However, most buyers and vendors will agree to do a handover of keys. You, as the new owner, will be responsible for that property as soon as the handover is completed.
What are the purchase costs?
Even though the property itself is usually rather expensive, the total purchase costs in most cantons usually range from 2.5% to 3.8% of the property value. This includes the purchase tax, land registry fees, and notary’s fee.
The mortgage registration fee varies from canton to canton and it’s charged on a sliding scale. For example, if you want to buy property for sale in Verbier which is located in Canton Valais, the sliding scale starts at 1% until 200k CHF, 0.8% until 500k, and approximately 0.7% over 1m CHF. This will determine the cost of your Verbier property.
It’s also possible to avoid the mortgage registration fee if a mortgage already exists on the property you’re purchasing. In that case, the mortgage can be transferred to you.
What taxes will you pay?
As a foreigner owning a property in Switzerland, you will need to pay taxes to three different bodies: the Federal Government, the Canton, and the Commune. The main taxes you will have to pay include:
- Income tax. As a property owner, you will be taxed on a notional income for the right to use your property. This tax will be calculated based on the property itself and the state of the local rental market.
- Wealth tax. This tax is calculated based on all of your assets and is levied at a cantonal level. The wealth tax on your property will be based on its tax value which is determined by a range of assessment criteria.
- Property tax. Each canton has a different annual property tax that is based on the tax value of the property.
- Capital gains tax. Any profit made from selling a property is subjected to capital gains tax, which is levied by the relevant canton. It’s calculated based on the original purchase price and the agreed sales price minus the cost of improvements and renovations.
- Inheritance tax. If you inherit or are gifted property in Switzerland, you will be subjected to a tax of between 15% and 55%.
Property for sale in Verbier
There are numerous reasons why you may consider Verbier real estate for sale, including the quality of life, private holiday accommodation, relocation, business purposes, or investment and security. No matter the reason, we have a number of apartments and chalets you can choose from.
For discretion and our clients’ privacy, we have not published all of our listings online. In fact, what we have listed is just a tiny part and we have many more properties that will catch your attention. If you can’t find your dream apartment or chalet on our listings, feel free to contact us for a full list of Verbier properties for sale.
Depending on your requirements, you can look for a bigger or smaller property, different styles, located in different places in Verbier, and so on. Apartment, penthouse, or chalet for sale – you name it, we have it. We also offer villas in other locations.
We update our list on a weekly basis to match your wishes and requirements. We are currently accepting new homes to include in our sales portfolio. Get in touch with ABC Real Estate today for a commitment-free discussion.