Workshop by Laetitia Fracheboud and Olivier Margraf on the occasion of the ISIS) seminar on September 23-24, 2024 entitled "Investments in real estate (national/international)"
Note: This language version is an automatically generated translation. The text may therefore contain linguistic and terminological errors.
view in original language (German)Luise Steinreich lives in Germany and owns a vacation home in St. Moritz as part of her private assets. She demolishes it and has a new one built. This results in a tax deduction surplus of CHF 250,000 (demolition costs) for the 2022 tax period, which cannot be offset due to a lack of other Swiss taxable income. In 2022, Luise Steinreich earned investment income of approximately CHF 1 million, which she pays taxes on in Germany.
Luise dies in 2023 and leaves behind two heirs, who each inherit half of the vacation home in St. Moritz.
The Dornachers, a married couple residing in the canton of St. Gallen, own several properties in various cantons of Switzerland, which they have acquired since the early 1990s. In July 2016, they purchased an undeveloped plot of land in Zofingen, Aargau, for CHF 850,000. In November 2016, they also purchased the neighboring parcel for CHF 250,000. In total, the Dornachers took out a mortgage of CHF 200,000 for this purchase. Originally, the couple intended to build a multi-family home on these parcels of land and rent out the apartments. The couple commissioned an architectural firm to plan the project.
Since the area of the plots is subject to a design plan requirement under applicable building and zoning regulations, a design plan had to be prepared first. This led to an initial delay in the construction project. After a design plan was finally available in 2018, two construction projects were developed in 2019 and 2023. However, neither project fully convinced the Dornachers. Since Mr. Dornacher had also become seriously ill in the meantime, the couple decided to put the construction project on hold for the time being. By that point, project costs (engineering work, development studies, and strategic planning) had totaled CHF 34,500.
In January 2024, Felix Tschudin, on behalf of Tschudin Bau AG, submits a purchase offer to Mrs. Dornacher for the two parcels of land at a price of CHF 4 million. The parties subsequently conclude a purchase option agreement in July 2024 in favor of Tschudin Bau AG, and Tschudin Bau AG pays an option fee of CHF 150,000. The right of purchase applies exclusively to the two parcels of land.
Tschudin Bau AG then commissions a development project at its own expense and, as the developer, obtains the corresponding building permit. The Dornachers are not involved in this project and do not issue any instructions in this regard.
On December 28, 2024, the Dornachers on the one hand and Tschudin Bau AG on the other hand execute and finalize a land purchase agreement for the two parcels of land. The purchase price amounts to CHF 3.9 million. The land purchase agreement defines the land parcels exclusively as the object of the sale. However, the agreement stipulates that, upon request by Tschudin Bau AG, the Dornachers must hand over all documents related to construction projects commissioned in the past. No such request is made.
In 2019, Lorenz Edelmann transferred five properties located in the Canton of Thurgau to a self-controlled stock corporation at their acquisition cost. In 2024, the corporation sold one of the transferred properties to a third party (sales proceeds of CHF 2.5 million; book value of CHF 750,000).
Ms. Häfeli, a resident of the canton of Schwyz, inherited five apartment buildings (built between 1970 and 1975) with a total of 45 apartments in the canton of Zurich in 1995. All apartments are rented out to third parties. In 2023, Ms. Häfeli generated net rental income of CHF 2,050,000.
CasAdmin GmbH, Zurich, is responsible for managing Ms. Häfeli’s properties. Under a corresponding management agreement, it handles technical management, leasing, rent collection, and billing. In 2023, CasAdmin GmbH charged Ms. Häfeli a fee of CHF 75,000 for managing the properties.
Since inheriting the properties in 1995, Ms. Häfeli has regularly invested in them. In 2001, this resulted in costs of CHF 1,500,000 for the addition of a story to a building, and in 2012, costs of CHF 350,000 for the expansion of the garden area at another property. Subsequently, in 2019, Ms. Häfeli carried out energy-efficiency renovations on all the houses for a total of CHF 1,050,000.
Up through and including the 2021 tax period, Ms. Häfeli consistently declared the properties as private assets. In her 2022 tax return, she declared the properties as business assets for the first time. Ms. Häfeli is now reaching an age where she wishes to settle her estate. Since Ms. Häfeli has three children and to prevent her sole ownership of the properties under civil law from having to be divided into co-ownership, she has the idea of transferring her properties into a stock corporation based in the canton of Schwyz. However, she only wishes to proceed with this plan if it does not entail any significant tax consequences.
The original acquisition costs of the properties are unknown. Through the 2021 tax period, Ms. Häfeli has declared the properties at a wealth tax value of CHF 14.5 million each year.
In 2022, Ms. Häfeli commissioned FutuRE GmbH, a real estate developer, to develop a project for the most climate-efficient possible total renovation of her properties. She intends to seek one or more investors for its implementation. The transfer of the properties to business assets and their contribution to a stock corporation must be viewed in this context.
Same initial situation as in Variant 1. However, Ms. Häfeli’s properties are now located not in the canton of Zurich, but in the canton of St. Gallen.
In 2000, Alexander Maier purchased a property built in 1971 for CHF 600,000 (land value CHF 350,000) and has since made value-enhancing investments of CHF 100,000 in it. Since 2010, building maintenance has been severely neglected. In his tax returns, Alexander has only claimed the flat-rate property maintenance allowance. In 2023, Alexander sells the property for CHF 750,000 to an institutional investor who intends to build an apartment building on the site.
The institutional investor is willing to compensate for the building’s value as well and, in addition, to pay a “package premium” because they want to outbid other interested parties. The agreed purchase price amounts to CHF 3 million (market value including the building: CHF 2.3 million). In return, Alexander must already obtain the demolition permit from the local municipality.
Julius Meyer, a resident and tax resident of Germany, holds 100% of the shares in C AG. C AG is a real estate company with numerous properties in the city of Zurich and in Winterthur. The shares in C AG are clearly classified as part of his private assets.
On July 1, 2024, Mr. Meyer sells all shares in C AG for CHF 35 million to a stock corporation headquartered in Zurich.
C AG now holds real estate exclusively in the canton of Thurgau.
