News from DL MoneyPark and information on the financial market and Swiss romande real estate

Author : Kristen

Distribution of interest expense

Switzerland / Switzerland

Do you have, in addition to your primary residence, a second real estate property? For example, a house or vacation apartment in Graubünden? If so, you are also subject to taxation in this canton. Consequently, it is this secondary residence tax in which your invested capital, rental value, and in the event of sale, real estate gains are also taxable.

If you have taken out a loan to finance one property or the other, or even both, the amount will be distributed depending on the location of the property or properties and the remainder of your assets. Then the amount will be deducted from your overall capital in the corresponding canton. The debtor interest will be broken down using the same principle.

The market value of the concerned real estate serves asa basis for the calculation. Cantonal differences are reflected in the balance coefficient.

Switzerland / Abroad

Do you live in Switzerland, but have a vacation home abroad? The question of how to distribute debts and interest should also be considered in this case. As with a vacation home in Switzerland, the distribution depends on the location of your assets, which should be valued at the market value, both in Switzerland and abroad. For properties located in a foreign country, the market value often corresponds to the purchase price.

Your real estate property abroad will be subject to taxation in accordance with the local legislation. If you have taken out a loan for your vacation home abroad, it is likely that you will be able to deduct it from your taxes. Everything depends on the applicable rules in the country in question. We recommend that you inquire on site.

As far as Swiss taxation and the interest deduction on your property abroad are concerned, some cantons, namely Geneva, regulate the deduction of interest between Switzerland and abroad.

Articles on taxation: