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In Switzerland, real estate capital gains tax (RECGT) is a major cantonal tax that has a direct impact on the net capital gain realized upon the sale of a property:

  • The calculation of real estate capital gains tax is based on the difference between the sale price and the acquisition value, including qualifying expenses.

  • The tax rate is degressive: the longer the holding period, the lower the tax burden, decreasing for example from 30% to less than 10% depending on cantonal brackets.

  • The law allows for a deferral of payment in the event of reinvestment, provided that the proceeds from the sale are reinvested in a new primary residence in Switzerland.


What is real estate capital gains tax (RECGT)?

Real estate capital gains tax is a tax levied in Switzerland upon the sale of a property when a profit is realized from the transaction. It is a tax separate from ordinary income tax and is specific to each canton.


What is meant by profit or real estate capital gain?

A real estate capital gain corresponds to the difference between the sale price of the property and the acquisition price plus value-enhancing invested costs. For example, if a single-family house is purchased and renovation work is carried out, the cost of the work increases its market value.


Who must pay this tax?

Any individual who sells a property that was held as part of their private assets. If the property formed part of business assets (e.g. properties held by a company), different rules may apply, and the gain may be taxed as income or profit depending on the canton.


The difference between monistic and dualistic systems

Although Switzerland operates under a federal system, the rules differ depending on the location of the property.


The Vaud and Geneva system (Dualistic)

In most French-speaking cantons, the dualistic system applies. This means that a real estate gain realized by a private individual is taxed via this special tax (RECGT), whereas a gain realized by a company is taxed as ordinary business profit.


The Zurich or Bern exception (Monistic)

If you own property in German-speaking Switzerland, be aware that the monistic system is common there: all real estate gains (private or professional) are subject to the same real estate capital gains tax.


How is real estate capital gains tax calculated?

In Switzerland, the calculation of real estate capital gains tax (RECGT) is not based on the total sale price, but solely on the net profit realized.


To determine this amount, cantonal tax authorities calculate the difference between the exit value and the entry value, while also taking into account the duration for which the property was held.


The fundamental calculation formula

To determine the taxable base, the tax authority uses the following equation:

  • Taxable gain = Sale price − (Purchase price + Expenses)

Where:

  • Sale price: the amount officially authenticated by the notary, from which brokerage fees and agency commissions may be deducted.

  • Purchase price: the price paid at the time of the initial acquisition. If the property was acquired a very long time ago (often more than 20 or 30 years, depending on the canton), the historical tax value or valuation at the time may sometimes be used as the calculation basis.

  • Expenses: all costs that increased the value of the property or are related to the transaction (notary fees, transfer taxes, value-enhancing works).


The different types of capital expenditures

Two types of capital expenditures can be distinguished:

  • Value-enhancing expenditures: these are works that increase the value or quality of the property, such as adding a terrace, fully renovating a kitchen or a bathroom, etc.
  • Repair or major maintenance expenditures: certain major repairs may be accepted if they extend the lifespan of the property or prevent its depreciation, for example the complete replacement of pipes or the renovation of the façade.

However, ordinary maintenance or routine repair expenses (painting, minor repairs, gardening, etc.) are not considered capital expenditures and cannot be deducted.


Holding period

Be aware that the holding period of a property directly influences the amount of real estate capital gains tax. The objective is to encourage long-term ownership and discourage short-term speculative sales.


Thus, the longer you hold your property, the lower the tax rate. For example, in the cantons of Vaud or Geneva, the tax decreases in annual steps. After 20 or 25 years, the reduction on the base tax can reach 50% to 100%, depending on the canton and the type of property.


Conversely, if you resell your property after a very short period (generally less than 2 to 5 years), a surcharge is applied. This “speculation surcharge” can significantly increase the tax in order to discourage real estate trading operations.


Cantonal tax rates and brackets (Vaud, Geneva, Valais)

Each canton applies its own taxation scale.


Canton Calculation system Specific feature
Vaud Progressive decreasing rate The tax rate starts at 30% and decreases to 7% after 24 years of ownership.
Geneva Progressive decreasing rate Full exemption (0%) after 25 years of ownership for a primary residence.
Valais Progressive scale The tax rate depends on the amount of the gain and the holding period, with annual allowances.


Tax deferral: the key to changing homes without a tax burden

If you sell in order to buy again, the tax authority allows you not to pay the tax immediately. This is known as a tax deferral for reinvestment. It is a major financial lever that allows you to reinvest the entire capital gain into your future home rather than paying a substantial portion to the cantonal tax authority.


Strict conditions for the primary residence

First of all, the sold property must have been your actual primary residence (where you were officially registered with the residents’ registry). Secondary residences, rental properties, or investment buildings are strictly excluded from this privilege.


Tax authorities require continuity. If you rent out your house for three years before selling it, you risk losing the right to deferral because the property will have lost its "primary residence" status at the time of sale.


Time limits and amounts

The allowed period between the sale and the purchase varies by canton, but the standard range is between 12 and 24 months. The amount of deferral depends on how the sale proceeds are reused:

  • Full reinvestment: if the purchase price of your new home is equal to or higher than the sale price of the former one, the entire tax is deferred. You pay nothing at the time of the transaction.

  • Partial reinvestment: if your new acquisition costs less (for example, selling a large villa to buy a smaller apartment at retirement), the portion of the gain that is not reinvested is taxed immediately.


FAQ: everything you need to know about real estate capital gains tax

When must the tax be paid after the sale?

The tax authority sends the invoice a few months after the deed is signed, but the notary usually withholds a provision from the sale price to guarantee payment. This retention secures the buyer and ensures immediate settlement of your tax debt.


Can routine maintenance costs be deducted?

No. Maintenance costs (painting, boiler servicing) are deductible only from your annual income tax. Only value-enhancing works that increase the intrinsic value of the property reduce real estate capital gains tax.


What happens in the event of a real estate loss?

If the sale price is lower than the total purchase price (including costs), no tax is due. Depending on the canton, this loss may sometimes be offset against gains from other property sales made in the same year.


Is the tax due in the case of inheritance or donation?

Payment is deferred: the heir pays nothing at the time of transfer but inherits the property’s tax history. The tax will be calculated on the total capital gain since the original purchase on the day the heir sells the property.


What is the impact of a withdrawal from the pension fund (2nd pillar) at the time of sale?

Repayment of the amount withdrawn from your pension fund is mandatory if you do not reinvest in a new home. However, this repayment is not deductible when calculating your taxable real estate capital gain.