Taxes on the sale of my property: are they inevitable?
You sign the sale of your property, and you make a profit: good news? Yes, but….what about the taxes ? A quick overview to understand everything and pay as little as possible.
In Geneva, the tax collected when you sell your property is called IBGI. This is the tax on profit and earnings made on real estate. Your profit (or your gain) corresponds to the difference between the price at which you sell now and the price you yourself paid at the time of purchase.
Deductions are possible
Dans certains cas, il est possible de réduire ce montant imposable :
- In certain cases, it is possible to reduce the taxable amount: you can deduct the amount of the brokerage commission form the selling price.
- To increase the value of your purchase, add:
- The acquisition costs (registration fees, land register and notary fees)
- The value of certain works you carried out (provided it resulted in an improvement of the property)
- 30% (if you take as a reference value the tax value of the property 10 years before its sale)
A tax whose rate decreases over time
Sale of your property after 25 years = no tax to pay
For sales made by individuals, the state applies a decreasing rate on the gain depending on the duration of the ownership.
If you have been an owner for:
- Less than 2 years: the rate is 50% on the profit
- 2 to 4 years: the rate is 40%
- 4 to 6 years: the rate is 30%
- 6 to 8 years: the rate is 20%
- 8 to 10 years: the rate is 15%
- 10 to 25 years: the rate is 10%
- More than 25 years: the rate is 0%*
*2% as of the 1st of January 2024
Inheritance or donation : a different calculation
If you inherited the property or received it as a gift, the duration of possession is calculated as follows:
- The death or donation took place prior to January 1st 2001: the duration of possession begins upon death or upon donation (en francais rien ecrit sur donation?)
- The death or donation took place after January 1st 2001 : the duration of possession goes back to the origin of ownership of the deceased or the donor.
Defer payment of tax
If you sell your primary home in Geneva to buy a new one in Switzerland, you can ask to benefit from deferred tax.
This measure allows you, under certain conditions, to use your equity gain for your new purchase.
This tax remains due: the state will claim it from you the day you resell or if you let the property out.
Recover tax already paid
Have you already sold and paid your tax and you are buying a new property? If less than 5 years have passed between the two transactions, you can request the reimbursement of the tax on profit and earnings and use it for your purchase to increase your own funds.
And a real estate company ?
You are also affected if you sell shares in real estate companies. The same rules and calculations apply in this case.
On the other hand, if you are considered a professional real estate company, another method of taxation applies. This will be the subject of a future article.
Our Advice
Keep all the proof of your payments carefully for the duration of the ownership of your property. This involves being able to easily gather proof of payment of the various fees and invoices for your added-value work at the time of the sale. Don’t forget that the brokerage commission you pay is deductible.
Give everything to the notary who will process your sale so that he/she can claim all possible deductions.
Subscribe to stay informed
