Are you thinking of buying a second residence in Switzerland? Who doesn’t dream of a holiday home in Ticino? However, the road to making this dream come true can sometimes be full of pitfalls. In this article, we explain the different restrictions you need to know about second residences in Switzerland.
Holiday home – Secondary residence
What is a secondary residence ? Definition
In Switzerland, a secondary residence is a dwelling that is neither used by persons domiciled in the municipalities in question, nor used for professional or educational purposes. Secondary residences are usually used for holiday purposes and are often rented out to third parties.
What is the impact of the Federal Law on Secondary residences?
Since the Federal Law on Second Residences came into force on the 1st January 2016, it is no longer possible to build a second home in Swiss municipalities where secondary residences already represent more than 20% of the total housing stock.
The aim of this initiative is to “put an end to the invasive construction of secondary residences”. Before you start building a secondary residence, find out which municipalities you are interested in.
What is the tax on a secondary residence?
In Switzerland, secondary residences are taxed in the same way as primary residences. However, if you invest in a secondary residence abroad, you will have to pay taxes in the country concerned.
Buying a secondary residence as a foreigner
There are two types of foreign nationals in Switzerland:
- EU/EFTA nationals living in Switzerland
- Non-EU/EFTA nationals living in Switzerland.
Depending on your passport, you may need to apply for permission to buy a secondary residence.
Are you an EU/EFTA national living in Switzerland?
You have the same rights as a Swiss citizen. You can buy a property without having to apply for a permit.
Are you a non-EU/EFTA national living in Switzerland?
Unlike Swiss citizens, you will need a permit to buy your second home.
Second home mortgage – How to finance your secondary residence?
Most financial institutions require an equity investment of 20% for a primary residence. On the other hand, due to the higher risk of a secondary residence, most banks require between 35 and 40% of the sale price.
You can do a free online simulation to see if you can get a mortgage with the equity you have. Some banks, if they respond favourably to an initial approach, will be happy to study your file in detail.
How to finance your secondary residence?
Unlike the costs for a primary residence, pension funds, i.e. the 2nd and 3rd pillars, cannot be used to finance your second home. The law stipulates that the entire equity capital must come from savings.
Higher interest rates for secondary residences
The interest rate for secondary residences is often much higher than for the purchase of a primary residence. On average, this rate can be up to 25 basis points higher than for primary residences.
How to declare your secondary residence?
Have you just bought your secondary residence? Don’t forget to register your secondary residence with the local residents’ registration office. To do this, you will need:
- the declaration of arrival as a secondary residence (to be requested from the local residents’ registration office)
- the certificate of establishment from your main municipality
- a copy of your residence permit, if applicable
- a copy of your employment contract
- a copy of the rental contract for this accommodation.
