Workshop by Céline Martin and Ridvan Jetishi at the ISIS) seminar on November 12, 2024 entitled "Imputed rental value, preferential rent, profit costs and other deductions"
Note: This language version is an automatically generated translation. The text may therefore contain linguistic and terminological errors.
view in original language (German)Mrs. Meier lives with her husband and three children in a single-family home in the canton of Zurich. In addition, the family owns a vacation apartment in Graubünden and recently purchased a vacation home in the south of France. To finance these purchases, the properties in Switzerland were secured with mortgages (detached house: CHF 1,000,000; Graubünden apartment: CHF 500,000; Glarus apartment: CHF 300,000; interest expense for the year in question: CHF 54,000). Shortly after purchasing the two additional properties, one of the three children moves out, leaving his room “empty.” The apartment in Graubünden is used only during the months of June/July and February. The imputed rental value of the house in Zurich is set at CHF 50,000 annually (property tax value CHF 1,400,000) and the properties in Graubünden and France at CHF 20,000 and CHF 10,000 per year, respectively (property tax value CHF 1,000,000 and CHF 500,000).
Mr. Meier still owns a rented apartment in the canton of Glarus from a previous inheritance (annual rent CHF 20,000; tax value CHF 800,000). Since the electrical and water lines were renovated, the maintenance costs for the year in question amount to CHF 30,000.
The Meiers’ movable assets amount to CHF 200,000.
Mr. and Mrs. Anton are taxpayers in the Canton of Zurich. Mr. Anton is the sole shareholder and a member of the board of directors of Anton AG, which has long leased a property from an (independent) Vermiet AG. Anton AG subleases the majority of the premises to third parties at a rent of approximately CHF 155,000 per year, which roughly corresponds to the rent paid to Vermiet AG, so that there is hardly any profit from the sublease. The sublease agreement is open-ended, and only the subtenants have access to the premises.
Mrs. Anton (privately) now purchases the property and subleases the premises to Anton AG for approximately CHF 50,000 annually. The sublease agreements remain unchanged. As a result, the company generates an annual profit of approximately CHF 105,000 from the subleases. Since the company incurred significant losses in previous years, it uses this income to cover losses and repay the existing shareholder loan.
Classify the following expenses into one of the categories. The work is being carried out on a property in Zurich.
Mr. Müller, owner of an apartment building in Zurich, carried out a comprehensive renovation of his property in 2022. The building is over 140 years old, and the renovation included, among other things:
The total cost of the renovation was CHF 1,500,000. The building is listed in the Federal Inventory of Swiss Heritage Sites of National Importance (ISOS). In light of the upcoming renovation, Mr. Müller contacted the tax authority and sought their recommendation—more specifically, a specialized assessment.
The cantonal tax authority classified all costs as value-adding investment costs in accordance with existing practice regarding economic new construction, which would mean that Mr. Müller could not deduct the costs from his taxable income. Mr. Müller was of the opinion that at least part of the costs were value-preserving and should therefore be tax-deductible as maintenance costs, contrary to the tax authority’s view.
