Postponement of real estate capital gains tax in the canton of Zurich

The deferral of property capital gains tax in the canton of Zurich makes it easier to purchase a replacement property when moving to a new home.

Using the example of the canton of Zurich, the following table shows the three cases in which the tax is completely deferred, partially deferred or must be paid immediately and in full.

1. If the replacement property is more expensive than the sales proceeds, the tax is deferred. In the example, 1 francs had to be paid for the replacement property, so it could not be financed from the sales proceeds. Tax deferral therefore makes sense.
2. If the realized profit is less than the profit on the property being sold itself, the difference can be deferred. In this example, 180 francs are taxable.
3. If the realized profit is higher than the profit on the property being sold, i.e. the replacement property was purchased for less than the purchase price of the property being sold, the tax must be paid in full. With a realized profit of 630 francs, it is possible to pay the taxes, even if they are very high. With a long holding period of 000 years, it will still be around 20 francs.

Optimize the deferral of real estate capital gains tax

In detail, it is important to optimize the investment costs and all possible deductions. At the same time, the replacement property should be designed in such a way that the two real estate transactions fit. If mortgages still need to be amortized or transferred, things can get complicated.

Furthermore, it is important to note that replacement properties only apply to one's own residence and may not be used for investment properties.

“Self-use means that the property sold is used by the taxpayer himself for residential purposes at his main residence. This requirement is not met in the case of second homes or holiday homes.”

Source: Rundschreiben the Finance Directorate of the Canton of Zurich.

Deadlines for deferring real estate capital gains tax

Special rules apply to the deadlines for the replacement object:

• Planned replacement purchases can be claimed within a certain period of time. This also applies to parts of the property, such as extensions or conversions.
• The tax office can carry out a subsequent assessment up to 5 years after the final assessment in order to assess the actual situation of the replacement property.

In our practice, over 50% of private sellers of a property decide to purchase a replacement property. We are happy to support you with tax planning and tax return for the real estate capital gains tax.