Replacement purchase: deferring tax when selling your house
Many owners do not sell to cash in, but to live differently: smaller, closer to the children, without stairs. So that the move does not fail because of tax, Swiss tax law provides for the replacement purchase: anyone who invests the proceeds in a new home does not have to pay property gains tax for the time being.
In brief
- Deferral, not waiver: the tax becomes due on the later sale of the replacement property
- Deadline: usually two years before or after the sale
- Condition: owner-occupied residential property in Switzerland – also in another canton
- The application must be submitted
The principle
The property gains tax is not waived but deferred. The gain from the old house “migrates” for tax purposes into the new property. If you later sell the replacement property without another replacement purchase, the deferred gain is taxed together with the new gain. If, on the other hand, you move into a retirement home or bequeath the property, the deferral can remain in place for a very long time.
The conditions
- The property sold was permanently and exclusively owner-occupied (main residence)
- The replacement property is also owner-occupied – holiday flats and investment properties do not count
- The replacement property is located in Switzerland – the canton does not matter
- Reasonable period: in Basel-Landschaft usually two years – the purchase may also precede the sale
Partial reinvestment
If only part of the proceeds is reinvested, the so-called absolute method applies: only the part of the gain that is reinvested beyond the original investment costs is deferred. Anyone moving from a large house to a cheaper flat therefore often pays tax immediately on part of the gain.
Sale for CHF 1,000,000, investment costs CHF 760,000, gain CHF 240,000. Purchase of a flat for CHF 900,000: CHF 140,000 is reinvested beyond the investment costs → this part is deferred, CHF 100,000 is taxed immediately. Purchase for CHF 1,000,000 or more: full deferral.
Also for the transfer tax
The canton of Basel-Landschaft also recognises the replacement purchase for the transfer tax (1.25 % for the seller): anyone who invests the proceeds within two years in a replacement property with the same use is exempt. The buyer is exempt if they occupy the property exclusively and permanently.
Procedure and application
- After the sale, the tax administration sends the property gains tax return
- Claim the replacement purchase in it – with the purchase contract of the replacement property or a declaration of intent
- If the purchase has not yet taken place: the tax is assessed provisionally and revised after the purchase (application within the deadline!)
- Roman Frey, our property fiduciary, prepares the return and submits the application
Typical pitfalls
- The new property is let first – then no owner-occupation, no deferral
- Deadline missed because the new build is delayed – contact the tax administration early
- Receipts for the old investment costs not kept – they also count on the later sale of the replacement property
- Deferral not applied for – the tax administration does not grant it on its own initiative
Questions on this topic.
Does the replacement purchase also apply to a purchase in another canton?
Yes – Switzerland-wide since 2001.
- The deferral is granted by the canton you leave
- On the later sale, the new canton taxes the entire gain
Can I buy first and sell later?
Yes, that is also a replacement purchase.
- The two-year period applies in both directions
- The old house may not be let permanently during the transition period
What happens in the event of a divorce?
In the case of a division of marital property the tax is also deferred.
- If one spouse takes over the house, no property gains tax is due
- On the later sale the original purchase price counts
Selling and buying again?
We plan the sale, purchase and taxes together – with Roman Frey, our financial adviser.
Let’s talk about your property.
Call or write to us – reply within 24 hours.
ImmoBilà GmbH · Schneckelerstrasse 1, 4414 Füllinsdorf
info@immobila.swiss · Mon–Fri 8:00–12:00, 13:30–17:30