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Planning the transfer of your real estate assets should not be improvised! To prepare your succession with peace of mind, we recommend planning your transfer in advance :

  • Since the 2023 reform of inheritance law, the disposable portion has increased (through the abolition of the parents’ reserved share), giving you greater freedom to favour an heir or partner without disadvantaging descendants.
  • An heir may only keep a property if their personal income covers the theoretical interest charges (often calculated at 5%) and the associated expenses.
  • With usufruct donations, you can reduce the taxable value transferred and save tens of thousands of francs depending on your canton.

Real estate and inheritance : what does Swiss law say ?

In Switzerland, the transfer of real estate assets is strictly governed by the Civil Code (CC).

The principle of universal succession

At the time of your death, the principle of universal succession applies (Art. 560 CC). Unlike other legal systems, heirs automatically become owners of the property.

No formal procedure is required to take possession of the rights and obligations linked to the transferred property, but your heirs become personally liable for the property’s expenses from the very first day.

The concept of the heirs’ community

By default, the heirs form a hereditary community known as an heirs’ community. The real estate property then belongs to all of them jointly.

As a result, no major decision (sale, major renovation, new mortgage) can be taken without the unanimous consent of all members.

In the event of a deadlock, an heir may request the partition of the estate or the appointment of a representative of the community.

Protection of compulsory heirs

Swiss law protects the close family circle through the reserved share system, namely descendants and the surviving spouse.

If a testamentary disposition infringes upon these minimum shares, the heirs may bring a reduction action in order to recover what is legally due to them.

Good to know : since the revision of inheritance law in 2023, the parents’ reserved share has been abolished and the descendants’ share reduced, offering greater flexibility to the deceased.

The notarized deed and the Land Register

The transfer of ownership of real estate only becomes legally enforceable against third parties once it has been registered in the Land Register.

Any transaction or modification of a real property right (transfer of ownership, creation of a mortgage note) requires a notarized deed.

Depending on the canton (for example Geneva or Vaud), the intervention of a notary is mandatory in order to authenticate the inheritance documents necessary to update the register.

Which real estate succession strategy should be favoured ?

Choosing the right transfer vehicle allows the succession to be adapted to the family’s needs while benefiting from tax advantages.

Donation with reservation of usufruct

By transferring the bare ownership of your primary residence, you reduce the taxable value of the transfer (deduction of the usufruct value based on age). This allows the property to be removed from taxable wealth while retaining control over its use.

Advancement of inheritance and estate equalization

Financing the purchase of an apartment for a child constitutes an advancement of inheritance. Unless otherwise specified, that child must report the market value of the property at the time of death back into the estate to be shared.

If the property has doubled in value over 20 years, the amount to be reported is the value on the date of death, which may force the heir to compensate their siblings substantially.

The inheritance agreement

Unlike a will, the inheritance agreement is signed with all concerned heirs. It allows the terms of the partition to be fixed (for example allocating the family villa to a specific child) with everyone’s consent, thereby eliminating any risk of future disputes.

What taxation applies to real estate succession ?

In Switzerland, there is no federal inheritance tax. Each canton (or municipality) sets its own rules.

Why direct heirs are often exempt

In almost all of Switzerland (Zurich, Bern, Valais, etc.), the surviving spouse, registered partner and direct descendants (children, grandchildren) are fully exempt from inheritance tax.

Only the cantons of Vaud, Neuchâtel and Geneva still levy inheritance tax on direct descendants, although it remains moderate thanks to significant allowances (often several hundred thousand francs).

This exemption aims to facilitate keeping the family home within the heirs’ hands, thus preventing them from having to sell the house to pay the tax.

The critical case of cohabiting partners and third parties

While direct heirs are privileged, the situation becomes complex, or even precarious, for beneficiaries outside marriage or close family ties.

In the absence of a family relationship, tax rates rise sharply. For a friend or cohabiting partner, the tax burden may reach 30% to 50% of the market value of the property.

Unlike a direct heir, a cohabiting partner inheriting a house worth CHF 1,000,000 could be asked by the tax authorities to pay CHF 300,000. Without significant liquid assets, the beneficiary is often forced to sell the property urgently in order to pay the tax debt.

Real estate capital gains tax and tax deferral

In the event of inheritance, real estate capital gains tax benefits from a protective mechanism known as tax deferral.

Indeed, the transfer of ownership by inheritance does not trigger immediate payment of the tax. The heir is considered to "take over" the deceased’s tax situation.

If the heir sells the property later, the tax authorities will calculate the tax by taking into account the deceased’s original purchase date. The longer the property has remained in the family, the lower the tax rate will be (some cantons even grant full exemption after 20 or 25 years).

How can joint ownership be ended in the context of a real estate succession ?

Partition is the legal act that dissolves the heirs’ community. This is often a delicate step, especially when the estate includes unique real estate assets that cannot physically be divided.

Buyout of shares

If one of the heirs wishes to retain exclusive ownership of the property, they must compensate the other co-heirs by paying them a balancing payment.

Be careful, as this transaction often involves taking over or subscribing to a mortgage. Banks apply strict financing capacity rules : the theoretical expenses linked to the property generally must not exceed 33% of the buyer’s gross income.

Private sale (sale to a third party)

When no heir wishes or is financially able to take over the property, selling it on the market remains the preferred solution.

Once mortgage debts and selling costs have been deducted, the net proceeds are distributed among the heirs proportionally to their inheritance shares. This is often the fairest method for obtaining the true market value.

Judicial arbitration

In the event of a persistent deadlock between heirs, a judge may intervene to resolve the dispute :

  • Partition by lots : if the estate allows it, lots of equivalent value are created and assigned by drawing lots.
  • Auction sale : as a last resort, the court orders the forced sale of the property.

This outcome is often the least financially advantageous, since public auctions generally generate a lower price than a private sale, not to mention the high legal costs involved.

FAQ

Can the surviving spouse be favoured over the children ?

Yes, through an inheritance agreement or a clause allocating the entirety of the marital community share (for couples under the participation in acquired property regime), while respecting the children’s legal reserved shares.

How is the value of a property calculated for partition purposes ?

The market value at the time of partition prevails. It is essential to appoint an independent expert to obtain a neutral valuation, as the taxable value used by the authorities is often far removed from actual market reality.

Do mortgage debts pass on to the heirs ?

The heirs are personally and jointly liable for the deceased’s debts. If the mortgage exceeds the value of the property, it is recommended to renounce the inheritance within three months.

What is the cost of transferring real estate through inheritance ?

In addition to possible taxes, notary fees and Land Register registration fees must be taken into account, which vary significantly from one canton to another (generally between 0.1% and 0.5% of the property value).

How can a cohabiting partner living in the property be protected ?

Without any specific provision (will or inheritance agreement), the cohabiting partner has no rights and may be evicted by the legal heirs. It is therefore essential to grant them a right of residence or usufruct through the disposable portion.