Real estate often occupies a central place in the wealth of high-net-worth families in Switzerland: primary residences, secondary properties, rental buildings, interests in real estate companies. Each category follows a distinct tax and accounting logic. Supervising and reporting on these assets is an essential component of a consolidated wealth picture.
Forms of real estate ownership
Direct ownership
The owner holds the property in their own name. This is the most common situation for primary residences and holiday homes. It is straightforward, but its tax implications deserve attention.
The rental value (Eigenmietwert) is one of the most distinctive features of Swiss tax law, and is often unfamiliar to foreign residents. For any owner-occupied property, the tax authority imputes a notional income corresponding to the theoretical rental value of that property. This amount — generally set at 60–70% of the market rental value — is added to taxable income. In return, mortgage interest and maintenance costs are deductible. The Federal Council has set 1 January 2029 as the date on which the taxation of imputed rental value on owner-occupied homes will be abolished; the deduction of maintenance costs for these homes will end on the same date. Until then, the current rules apply.
Capital gains tax on real estate: when a property is sold, any gain realised on Swiss real estate is taxed by the cantons, under scales that depend on the length of ownership. The longer the holding period, the lower the rate generally applied.
Real estate company
For substantial real estate portfolios or those comprising multiple properties, ownership through a real estate company (SA or Sàrl) may be advantageous. The company owns the properties and the family holds the shares.
Potential advantages:
- Asset separation between real estate and personal assets
- Succession planning facilitated by the transfer of shares rather than properties
- Possible participation deduction on dividends (under conditions)
Drawbacks:
- Potential economic double taxation (corporate income tax + personal tax on dividends distributed)
- Structural maintenance costs (accounting, audit, annual general meeting)
- Specific rules for foreign persons under the Lex Koller
The Lex Koller
The Lex Koller (BewG) makes the acquisition of Swiss real estate by "persons abroad" subject to authorisation. The term is narrower than it sounds: EU and EFTA nationals domiciled in Switzerland, like foreign nationals holding a settlement permit (C permit), are not persons abroad (art. 5 BewG). For other foreign nationals domiciled in Switzerland, buying a main residence at their legal and actual place of domicile requires no authorisation (art. 2 para. 2 let. b BewG), and property used as a permanent establishment for a business is also exempt. Second homes, holiday homes and residential investment property, on the other hand, remain subject to authorisation, or are excluded, for persons abroad. This is particularly important for international families wishing to invest in Swiss real estate.
Rental value and cantonal real estate taxation
The rental value of the primary residence is taxed as income, but the way it is assessed varies considerably from one canton to another, as do the scales applied to wealth tax and real estate capital gains tax. Maintenance deductions offer a frequently underused planning lever: each year, and for each property, the taxpayer may choose between deducting actual costs and a flat-rate deduction (generally 10 to 20% of the rental value, depending on the age of the building). Aligning the timing of renovation works with this choice helps smooth the tax burden over time. For a family holding properties in several cantons, these cantonal variations call for a coherent overall view.
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Integration into wealth reporting
Real estate is often the poor relation of wealth reporting: valuations are less frequent than for financial assets, cash flows (rents, charges, works) are diffuse and consolidation with financial assets is rarely carried out rigorously.
Well-structured real estate reporting includes:
- Periodic valuation of each property, ideally annual, based on an estimated market value
- Net rental income after charges, maintenance and management fees
- Outstanding mortgage balance and corresponding debt service
- Tax value used to calculate wealth tax
- Latent capital gains relative to acquisition cost
These elements are consolidated with financial assets to produce a coherent overall wealth statement.
Directly held real estate occupies a particular place in this consolidation. In the absence of a daily market price, a periodic valuation by independent appraisal is the reference practice. Likewise, mortgages and the loan-to-value ratio (LTV) are monitored at the level of the overall wealth: it is there that the true debt exposure and the concentration of interest rate maturities become visible.
Ridger's role
Ridger supervises real estate assets within the consolidated wealth reporting framework — it does not handle rental management, tenant relations or works. Its role is to:
- Integrate real estate data into the overall wealth picture
- Coordinate with property managers, advisers and tax counsel
- Alert clients to the tax implications of real estate decisions (acquisition, sale, works)
- Ensure coherence between real estate reporting and other asset classes
To discuss your real estate wealth in this context, we invite you to a confidential meeting.