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Keeping or selling a property can have very different consequences depending on your personal situation and the state of the property market. Several factors can help you make an informed decision:

  • Market value alone is not enough to justify selling. Transaction costs, taxes and future plans can significantly affect the actual benefits of a sale.

  • A dynamic market is only advantageous if there is genuinely strong demand for properties comparable to yours, in your area and price range.

  • A property can remain an excellent long-term asset even if its value increases slowly, particularly when it generates stable rental income and requires little expenditure.


1. Assess Your Financial Situation and Personal Plans

Your property often represents a significant share of your wealth. The decision to sell therefore depends primarily on how you intend to use the capital tied up in the property.


Analyse Your Financing Capacity and Future Needs

A homeowner considering a new purchase should first determine how much money they will actually be able to reinvest in their next property.

Banks generally require a minimum of 20% equity to purchase a property, at least 10% of which must come from “hard” equity, meaning funds that do not come from the second pillar of the Swiss pension system.

Financial affordability must also comply with banking self-regulation criteria: the theoretical costs associated with the property should generally not exceed one third of gross income.


Let’s take an example:

A homeowner sells an apartment that was purchased for CHF 700,000 and is now valued at CHF 950,000. The remaining mortgage amounts to CHF 450,000. Even before considering taxes, the available capital is therefore not CHF 950,000, but around CHF 500,000. Transaction costs and any applicable property gains tax must still be deducted from this amount.


Impact of Taxation and Capital Gains on Your Wealth

The capital gain generated by a property sale is taxed in the canton where the property is located. Each canton applies its own rules, including tax reductions based on how long the property has been owned.

Generally, the longer a property is held, the lower the tax burden. Conversely, reselling a property shortly after purchasing it may result in higher taxation.

Simplified example:

A homeowner buys a house for CHF 900,000 and sells it a few years later for CHF 1.2 million. The gross capital gain amounts to CHF 300,000. However, the amount actually retained will depend on:

  • investments that have increased the value of the property;

  • expenses that can be taken into account for tax purposes;

  • the applicable cantonal tax rate;

  • the length of time the property has been owned.

Specific rules also apply to a primary residence. In several cantons, a tax deferral may be possible if the proceeds from the sale are reinvested in a new primary residence, subject to certain conditions.


2. Analyse the Local Property Market

A decision to sell should take into account the actual conditions of the market in which your property is located. National trends provide a general indication, but demand can vary considerably from one municipality to another.


Interest Rates and Changes in Buyers’ Purchasing Power

Financing conditions play a major role in buyers’ ability to purchase a property.

Following the sharp increase observed between 2022 and 2023, Swiss mortgage rates gradually declined. However, rates for multi-year fixed-rate mortgages remain significantly higher than the historically low levels seen before 2022.

This development directly affects the number of buyers who can afford to purchase a property. A difference of just one percentage point in the interest rate can represent several thousand francs in additional annual costs for a substantial mortgage.

For example, for a mortgage of CHF 800,000:

  • at 1.5%, annual interest costs amount to approximately CHF 12,000;

  • at 2.5%, they amount to approximately CHF 20,000.

Even though banks use a more conservative theoretical interest rate when assessing affordability, this difference can affect a buyer’s maximum budget.


Supply and Demand in Your Local Area

The Swiss property market is particularly dependent on location. A family apartment close to a train station in a sought-after area does not follow the same market dynamics as a similar property located in a less popular municipality.

Key indicators to consider include:

  • the number of comparable properties currently for sale;

  • the average time properties remain on the market;

  • price trends in the municipality;

  • the number of potential buyers for your type of property.

A rare property can remain highly attractive even in a less dynamic market. Conversely, a property with very common features may be subject to more negotiation.


3. Assess the Return and Costs of Keeping the Property

Keeping a property means maintaining an investment. The question is therefore not only whether the property will increase in value, but also whether its return remains attractive in relation to the costs involved.


Renovation Costs, Ongoing Expenses and Local Taxes

Maintenance costs can significantly reduce the financial benefits of keeping a property.

It is generally recommended to set aside around 0.5% to 1% of the property’s value per year for routine maintenance and future renovations.

For a property worth CHF 1 million, this represents an estimated budget of CHF 5,000 to CHF 10,000 per year.

Additional costs may include condominium ownership fees, energy-efficiency renovations, the replacement of technical equipment, or expenses related to periods when the property remains vacant.


Comparing Rental Returns with an Immediate Sale

When a property owner is deciding whether to sell or keep their property, the comparison should focus on the net return.

An apartment purchased for CHF 800,000 and rented out for CHF 30,000 per year generates a gross return of 3.75%. However, after deducting ongoing expenses, renovation costs, taxes and potential periods without a tenant, the actual return may be lower.

Selling can also provide an opportunity to invest the resulting capital elsewhere or finance a new property project.

The key question is therefore not simply how much your property is worth today, but rather what return your property capital could generate over the coming years.


Making an Objective Decision About Your Property

A professional valuation allows you to compare different scenarios on a reliable basis: selling, renting out or keeping the property. Beyond its market price, a comprehensive analysis should take into account:

  • the property’s current value;

  • the outstanding mortgage amount;

  • applicable taxes;

  • future costs;

  • the outlook for the local property market.

A professional property valuation also helps avoid two common mistakes: overvaluing your property and unnecessarily delaying a sale, or selling too quickly without considering the property’s long-term investment potential.


FAQ

Is It Always Worth Selling When Property Prices Are Rising?

Rising property prices do not automatically mean that selling is the best decision. The potential capital gain should be compared with the return that could be generated by keeping the property.


What Costs Should You Expect When Selling a Property in Switzerland?

The main costs may include estate agent fees, costs related to notarial deeds depending on the canton, potential early mortgage repayment charges and property gains tax.


How Can I Tell Whether Renting Out My Property Is More Profitable Than Selling It?

You need to calculate the net rental return, taking into account ongoing expenses, taxes, future renovation costs and the risk of vacancy.


Does the Length of Ownership Affect the Decision to Sell?

Yes. It can have a significant impact on taxation, particularly through cantonal mechanisms that reduce property gains tax depending on how long the property has been owned.