The communal real estate tax

Anyone who owns real estate in Switzerland may encounter, on top of the ordinary taxes on income and wealth, a specific levy: the real estate tax, collected at communal or cantonal level. It does not exist everywhere and does not work the same way everywhere, but where it applies it adds to the cost of holding a property. Understanding how it is calculated and who pays it helps to avoid surprises.

What the real estate tax is

The real estate tax is a levy that targets the ownership of a property as such, regardless of the income the property generates. It is an object-based (real) tax: it looks at the asset, not at the owner’s personal situation. This is why it differs from the ordinary taxes, which tax a person’s overall income and wealth.

Its distinctive feature is that, as a rule, it is calculated on the gross value of the property, without deducting the mortgage debts charged against it. This sets it apart from the wealth tax, where debts are deducted: in the real estate tax, someone who bought with a large mortgage still pays on the full value of the asset.

Where it applies

Here the ever-present Swiss caveat holds true: the matter is cantonal. The real estate tax is not harmonised across the country: some cantons provide for it, others do not; in some cases it is collected by the commune, in others by the canton. The name and the arrangements change too.

The practical consequence is that you cannot generalise: the fact that a property in one canton is subject to this tax says nothing about a property in another canton. Before buying or assessing holding costs, you must check the regime of the specific location in which the property lies.

How it is calculated

Where it applies, the tax normally follows this logic:

• Taxable base: the property’s value as determined for tax purposes (the official/assessed value attributed by the authority), taken as a rule at gross value, without deducting debts.
• Rate: generally expressed in per-mille (thousandths) of the taxable value. These are typically modest rates in percentage terms, but applied to the entire value of the asset.

The tax is therefore proportional to the value of the property: the higher the tax value, the greater the amount due. Because it is levied every year, it must be counted among the recurring costs of holding, alongside maintenance, insurance and mortgage interest.

Who pays it

The taxpayer is the owner of the property — an individual or a legal entity — as a rule based on the situation at a given reference date. Some points to bear in mind:

• Company-owned real estate: legal entities that own real estate may also be liable, where the tax applies.
• Location-of-the-property principle: the tax attaches to the place where the asset is located, not to the owner’s domicile. Someone domiciled elsewhere who owns a property in a canton that applies the tax nevertheless owes it to that territory.
• Sales during the year: on a transfer of ownership, the split between seller and buyer follows the local rules and the contractual agreements.

Not to be confused

The real estate tax must be kept distinct from other levies that revolve around real estate:

• The real estate capital gains tax, which targets the gain realised on a sale, not ownership.
• The transfer/registration duties, payable at the time of purchase.
• The imputed rental value, which concerns income taxation for those who live in a property they own.

These are different levels: the real estate tax is the one paid, where it applies, for the mere fact of being an owner, year after year.

In brief

• It is an object-based (real) tax on ownership, calculated as a rule on the gross value of the asset.
• It does not exist everywhere: it depends on the canton and sometimes on the commune.
• It attaches to the location of the property, not to the owner’s domicile.
• It must be counted among the recurring costs of holding, distinct from the real estate capital gains tax.

How we help you

We analyse the overall tax burden on your properties — real estate tax, wealth, imputed rental value and gains — territory by territory, so that you really know what ownership costs. Plan with our Tax Desk.