Swiss Mortgages

Introduction to Subsidies
Unlike most other countries that attract foreign property investment, Switzerland has a complex system of subsidies and tax breaks of which purchasers can take advantage. Not all subsidies are available in all instances, so obtaining local advice is recommended, before deciding on your property, in order to make sure that you are securing the best possible deal.

Swiss Law on Purchasing
Despite the relaxation of regulations in relation to the availability of property for foreign purchasers, there are still far more stringent rules in place than in most other countries. For example, foreign purchasers will only be able to invest in property that is considered to be for the public good and has been designated as suitable for foreign purchasers.

It is absolutely vital to understand that, in order to ¡¥get round¡¦ the issue of certain property only being available to Swiss residents, some foreign investors have set up schemes whereby the financing for the property is given to a Swiss national to make a purchase on their behalf. This is considered illegal and the government works hard to uncover these types of schemes.

Anyone found guilty of being involved with this sort of scheme risks losing the property and being convicted of fraud.

Subsides and Tax Breaks
The Swiss government has designated certain buildings as available for foreign investment. Further, these buildings must be made available to rent at a rate that is approximately 30 percent below the standard comparable market rates.

In return for being prepared to accept this lower rental level, the government offers subsidies and tax breaks that make the investment viable. Depending on the type of building that you are purchasing, it will be necessary for you to own the property for at least 10 years, rising to 20 years, in some cases.

Subsidies decrease with every year of ownership. However, it is also possible to raise rents, on an annual basis, in line with the reduction of subsidy.

Taxes are paid at local, canton and federal levels on property in Switzerland. Any foreign purchaser who opts to buy a ¡¥public utility building¡¦, as described above, will have a heavy discount on local and cantonal taxes at a reducing rate for the 10- or 20-year period.

Summary
Many foreign purchasers opt for a Swiss public utility building, as these can be freely owned by foreigners;
by doing so, the purchaser enjoys a range of subsidies and tax breaks;
however, it will be necessary to hold the property until the subsidy period ends, which can be as long as 20 years.