• France
  • Switzerland
  • Austria
Property Types in France
What are the three different types of property in France?
French properties may be classic freehold or leaseback. Leaseback apartments are in larger developments which are professionally managed and rented so you save the VAT. There is another option (which works for both new chalets and apartments), you can buy a classic freehold property and create your own lease and then you can still reclaim the VAT.
1. Leaseback
Some larger developments (often with swimming pools, wellness, restaurants and other facilities) have a full professional management service which will rent your apartment out when you are not using it. The property is freehold property but the day you buy it, you agree to “lease it back” to a management company for a minimum period of 9 years. During this time your property is fully managed and maintained by the letting agent but you may block out periods for your own use. The latest leaseback properties offer more flexible owners’ use than previously.   

Buyers are given a tax incentive to rent their apartment.  You do not have to pay the 20% TVA (French VAT) which you usually have to pay for a new classic freehold apartment. The prices in our brochures are therefore shown as net of VAT. Some leasebacks give a guaranteed index-linked rental income; others give you a share of the actual rental income for the weeks your apartment is in the rental pool.
2. Classic Freehold
Most properties are classic freehold. This is a second home property and you are not obliged to rent it. You may keep the property for your exclusive use or rent it.  
3. DIY Leaseback
If you buy a new “classic freehold” chalet or apartment and you choose to rent it on a commercial basis you can still reclaim the TVA and effectively get a 20% discount off the gross purchase price shown in our brochure. To qualify for the tax incentive given by the French tax office the rental arrangement has to satisfy their rules. You must rent your property to a specialist company (we can introduce you to one) on a long lease. The rental company must provide some basic services to the renters. You can block out periods for your own use so it is quite flexible. Depending on how many weeks you take yourself, the rental company will either offer you a fixed rental for the season or (more likely) pay you for each week it is rented.

The TVA you can reclaim is 20% and this is amortised over 20 years so if you decide after 10 years that you wish to cancel the lease and keep the property for your exclusive use you would pay back half the tax you saved. You can cancel at any time or sell the property on to a buyer who could either carry on the rental arrangement or pay back part of the TVA and keep the property for their own exclusive use. 
Do I have to rent my property?
  • Classic freehold property - there is no obligation to rent your property.
  • Leaseback property - you are required to rent this property for a minimum period of 9 years (further details above), but you may block out periods for your own use.
What are the advantages of a buying a newbuild property?
  • You have the option to save the 20% TVA (French VAT) if you decide to rent the property
  • You pay only 2.5% purchase costs (compared to 8% for a resale)
  • You don’t pay the Taxe Foncière for the first 2 years
The total saving can be 30%.
What are the benefits of purchasing a leaseback property?
Leaseback schemes are a tax incentive to encourage owners to rent their property and create employment so there are plenty of benefits:
  • TVA rebate – the buyer receives a 20% VAT rebate / discount on the gross purchase price
  • Guaranteed rental returns – some management companies give you a guaranteed quarterly or bi-annual rental income which is reduced according to a tariff for the weeks you use it yourself
  • Low purchase price – typically leaseback properties are in larger developments which are competitively priced
  • A trouble-free investment – the management company will organise and fund the maintenance of your property
  • Furnishing and storage - leaseback properties are usually sold fully-furnished with a private storage space for the owners to use while their property is rented
What are the implications of setting up my own leaseback arrangement?
You are simply signing a commercial lease (rather than a simple rental mandate) with a management company who carry out key services.

This means you are deemed to be running a commercial enterprise and therefore entitled to recover the VAT.  It is more of a commitment than a rental mandate and the restrictions are ones that don’t affect the normal owner (can't live there for more than 182 days a year and have to make it available for around 8 winter weeks).
Purchase Process and Costs
What is the purchase process for a newbuild property?
France is one of the most secure countries in the world when it comes to buying off-plan property as buyers’ interests and money are protected.

1. Placing an option
Some developers will block an apartment for you if you have booked flights to visit. When you have decided to buy a specific property most developers allow you to ‘place an option’ on the property thereby taking it off the market for a short period. This provides you with time to prepare your finances and gives the developer time to draw up a reservation contract.

2. Reservation contract
The first step is to sign a reservation contract and pay a deposit, which is usually 5%.
All deposits are held in Escrow by the appointed notary. The notary is a government officer and official third party in every property transaction who ensures safe transfer of ownership.

3. Cooling off period
Once you receive the counter-signed reservation contract you have a 10 day cooling off period during which you can still exercise your right to withdraw. Even after the cooling off period you still have the right to cancel and get your deposit back if your mortgage application is refused.

4. Signature of the notary’s contract (VEFA)
This must be physically signed in France in the notary’s office but most buyers sign a power of attorney in favour of the notary’s secretary or another responsible person to sign on their behalf as this is a formality and they do not want to travel to France just to sign. Depending on your citizenship may need to have your power of attorney ratified by a governmental authority (e.g. the Foreign Office in the UK).  On signature of the VEFA you will need to transfer the funds to the notary.
What is the purchase process for a resale property?
The notary will send you a sales contract which will include a property plans, energy reports, details of your mortgage and the conditions precedent.

Once approved and signed, the buyer pays the deposit which is usually 10% of the agreed purchase price.
What are the property purchase costs in France?
New property - As a tax incentive, to stimulate construction, the purchase costs for a new property are less than for a resale. Your total purchase costs including notary fees, land registration fees, and taxes will be approximately 2.5% of the property price. This applies to all new properties under 5 years old. If unsold after 5 years they then count as resales.

Resale property – total purchase costs will be in the range of 6% to 8%.

Registering the mortgage – the notary will charge an additional 1%.
Buying Off-Plan
What completion guarantees are given on new developments?
The notary can only sign the official sales deed when the developer has a financial guarantee / insurance policy which guarantees to the purchaser that the apartments will be finished and delivered even if the developer were to become bankrupt. This guarantee is known as the ‘financial guarantee of achievement’ (GFA) and the bank which is lending you the money to buy your apartment will insist that the developer has a GFA for the development before they will lend. The insurance company will only give a GFA when the developer has around 50% pre-sales.
Is my money safe?
Yes. All the deposits paid by the buyers are held by the notary in Escrow and must be returned to the buyer is the developer becomes bankrupt or some other major delay occurs. Only once the GFA has been obtained can the notary sign the title deeds for the transfer of ownership and transfer monies to the developer. 
What is the payment schedule for a new build property?

New build properties will tend to be funded through stage payments laid out in the VEFA. Commonly the schedule will look as below.

  • 5% paid as the initial deposit
  • 30% of the total price when the foundations have been laid
  • 35% of the total price when the property is weatherproof
  • 25% of the total price when construction is complete
  • 5 %of the total price on receipt of the keys

If you are taking a mortgage, you pay the first instalments and then bank will pay the remaining instalments. When you receive the keys you have one month in which to take possession of your property and report any faults to the developer.

How do I get the TVA back?

If you are buying a sale and leaseback property, the developer will organise the TVA (French VAT) rebate so you only pay the net price and have no paper work.

If you create your own commercial lease then you can either reclaim the TVA each time you make a stage payment or wait until you have paid the full price and reclaim the total TVA in one claim. These claims are usually processed in 2 or 3 months.

Should I take a mortgage?
If you intend to rent your property then there are tax advantages if you take a mortgage as you may offset the interest against rental income (which will no longer be permitted for UK property from April 2017). As your rental income will be in Euros you do not have any currency exposure if you intend paying your mortgage from rental income.
How much can I borrow?
French banks will lend up to 85% of the purchase price for a classic freehold, 80% for a leaseback to EU citizens. Non EU citizens are limited to 70% for sale and leaseback. US citizens are not able to borrow from Austrian or Swiss banks but French banks will lend up to 70% on a sale and leaseback and more on a classic freehold making France their only option in the Alps.

The repayment period is usually 15 or 20 years.

We are able to recommend mortgage brokers which specialise in French finance and deal with all the major French banks.

Whilst in many countries, mortgages are granted on the basis of a multiple of your earnings, this is not the case in France. French law does not allow lenders in France to offer mortgages if the repayments on that mortgage amount to more than 30% of the borrower’s monthly income (joint income for joint mortgages). This 30% includes any existing mortgage you pay for your principal residence.
The percentage level of the loan (LTV) will be reduced but if you have a high and stable income, the lending criteria can be relaxed. It may be necessary to consider re-mortgaging your principal residence to release equity.
What are the current rates?
French banks are able to offer fixed and variable rates. Rates vary continually but currently they are at almost the lowest level they have been for the last ten years and long term fixed rates are very attractive.
Buying in the Name of a Company
Can I purchase in the name of a company?
Yes, there are no restrictions in France. You should take expert advice though as there are several French options which include a SCI, SARL, EURLs, and SARL de famille.

The most commonly used vehicle to purchase and hold French residential property is a SCI, a ‘société civile immobilière’. However, running a furnished property is a commercial activity so as an SCI does not allow you to “depreciate” the asset, a ‘SARL” should be used. A “Sarl de Famille’ would a more suitable method of obtaining joint ownership. 
What are the benefits?
  • Purchase a property with multiple partners - there must be at least 2 partners (related or unrelated) but there is no minimum contribution
  • Tax-free ownership transfers – ownership can be transferred tax free (to children or grandchildren, for example) by a transfer of shares 
  • Tax efficiency – 10% reduction in the taxable amount of your property for Wealth Tax and negation of Inheritance Tax if you plan to transfer ownership 
  • No impact on mortgage application – SCIs and SARLs have a transparent structure so mortgage application will be treated as if you were simply applying in your own name
What are the costs?
The set up costs for an SCI start at around €1,000 and you will be required to pay a yearly maintenance fee of around €800 as well as formalities such as holding an Annual General Meeting. 
Investment and Selling
How do leaseback properties appreciate compared with classic freehold properties?
There is no significant difference between leaseback and classic freehold properties in terms of appreciation of value. If you buy a well-located property with good facilities it will always be in demand.
Are there restrictions on when and to whom I can sell my property?
No, you may sell your French property whenever you like to whoever you wish.

There are no penalties for selling a leaseback property and you do not have to repay any VAT. The buyer will purchase the freehold from you and will step into your shoes and continue the lease to the management company.

If you created your own sale and leaseback then when you sell the property the buyer has a choice; either to carry on the rental arrangement or to pay back part of the VAT and keep the property for their own exclusive use. 
What tax is payable when I sell the property?
Capital gains tax. French capital gains tax on the sale of a property in France is charged on a sliding scale which reduces with the years of ownership down to 0 after 22 years of ownership. No discount is given if you sell within 5 years. Thereafter there is a discount of 6% for each year.
Example; the profit tax on a property owned for 10 years would be reduced by 30% (5 x 6%)
What is the social charges tax? Will I have to pay it?
In addition to the standard capital gains tax and tax on rental income, the French tax office levied a ‘social charge’ of 15.5%, on top of CGT and Rental Income.

The European Court of Justice (ECJ) ruled in February 2015 that French social charges on unearned income such as capital gains or rental income generated in France should no longer apply where the taxpayer is subject to the social security system of another EU or EEA country or Switzerland. The French Supreme Court confirmed the ECJ’s position on 27th July 2015.
  • Non-EU residents - 33.3% plus 15.5% social charges, making a total of 48.8%.
  • EU residents - the top rate is 19% plus 15.5% “social charges”, making a total of 34.5%. 
What taxes will be paid on death?
Inheritance Tax. In France it is the beneficiary who pays the tax rather than the estate and the tax rates and allowances vary according to the deceased’s relationship to the heir.

There is no inheritance tax payable between spouses or couples with a “Pacte Civile de Solidarité”

Each child is entitled to a tax free allowance of €100,000 from a parent and there are large tax bands at both 20% and 30%. Therefore, for children, French inheritance tax is perfectly reasonable and for a large estate, where assets are left to children, normally the inheritance tax bill is considerably lower than in the UK. Also, France offers more opportunities for reducing tax. Inheritance Tax can be reduced or completely avoided by buying in the name of a company (SCI).

When the value of assets passes the €100,000 threshold the rate of Inheritance Tax is banded depending on the value of additional assets in France.
 Fraction taxable  Taxe rate
 Up to €8,072  5%
 From €8,072 to €12,109      10%
 From €12,109 to €15,932  15%
 From €15,932 to €552,324    20%
 From €552,324 to €902,838   30%
 From €902,838 to €1,805,677     40%
 Above €1,805.677       45%
Annual Property Taxes
What are the local property taxes in France?
There are two local annual taxes, the ‘taxe d’habitation’ and the ‘taxe foncière which are both are levied in October / November. These taxes are based on the cadastral value of the property. The rates of tax are set by the région, the département and the commune and vary from one district to another.

The taxe foncière and taxe d’habitation are both typically around 8 euros per m2 per year each. If you are leasing your property to a professional management company (see more detail later) the management company usually will pay the taxe d’habitation so you only pay only the taxe foncière. When you buy a new property you do not pay the taxe foncière for the first two years. 
Would I have to pay the French wealth tax?
No, probably not! This tax has a fearful reputation but you will probably not be liable to pay it as only applies on the net value of any assets in France  and only then if the net value of your French property (after deducting your mortgage) is over 800,000€. If you borrowed 80% to buy your property the wealth tax will only be an issue if your property is valued at 4m euros or more and then you can reduce your liability to the wealth tax by using a company structure such as an SCI. 
If I am liable to pay the French wealth tax what are the rates?
Wealth tax rates are progressive starting at 0.5% to a maximum of 1.5% of the equity.
 Fraction Taxable         Rate of Tax
 €0 - €800,000             0%
 €800,000 - €1,300,000    0.50%
 €1,300,000 - €2,570,000          0.70%
 €2,570,000 - €5,000,000     1%
 €5,000,000 - €10,000,000  1.25%
 €10,000,000+   1.50%
Are there any tax breaks for renting my French property?

Yes, due to the importance of tourism to the French economy the French tax office give much more generous tax incentives for renting your French property than the Inland Revenue would allow for a property in the UK. If your accountant claims all the allowances you should declare only a very small “paper profit” and thus pay no tax in France.  You can offset these:

  • Purchase costs  (the notary fees when you bought)
  • Land taxes
  • Interest on your mortgage
  • Accountant’s  fees
  • A “maintenance” trip (to check your property)
  • Property Depreciation - As 20% of your property value in France is in the land, the remaining 80% can be amortised (‘on paper’) by either 4% per annum over 25 years or 3.33% over 30 years even though the property is actually appreciating in value!
  • Furniture Depreciation – the value be amortised over 5 or 10 years.

With careful tax planning, you will not pay income tax in France. For example, the owner may elect when to start using the depreciation relief. If you wait until the mortgage interest is paid off or is no longer enough to offset 100% of the rental income and start the amortisation then that will continue to significantly reduce (or in most cases completely eliminate) your taxable profit.

From April 2017 buy to let rental properties in the UK will no longer qualify for income tax relief in the UK so you will not be permitted to off-set mortgage interest and costs against income tax. You can still off-set the interest on your French property provided you are deemed to be “in control” of the management so the rental of a classic freehold qualifies but a fully managed sale and leaseback will not. 

France has dual taxation treaties with most countries so you do not pay the tax twice and if you are liable to taxation in your country of residence you will be credited with any tax paid in France.

What are the rental income tax rates after deductions?

Non-residents pay French tax on the taxable income at a flat rate of 20%.

As explained above, you may make a lot of deductions before calculating your actual taxable income or if your gross rental income (i.e. the total rental income before deductions) from furnished lettings is less than €32,900, the taxable income may be calculated under the Micro-BIC, a simplified deduction scheme that simply taxes 50% of the gross income (i.e. 50% of the gross rental income – so the total income with no deductions at all – is automatically deducted in place of actual expenses).

No expenses need be demonstrated, no accounts are required and no separate tax forms for the business need be prepared. The main drawback of this regime is that it always shows a fixed taxable profit i.e. it can never show a lower net profit or a loss.

Leaseback - Rental Income and Running Costs
What are the annual costs of owning a leaseback property?
Owning a leaseback property incurs minimal on-going costs. Most management companies pay the taxe d’habitation and the service charges out of your rental income. Your rental income is net of all costs apart from the taxe foncière (typically around 8 euros per m2 per year). 
What rental yield can I expect to receive?
If your property is managed by a well-established management company, you can expect to generate a guaranteed net rental yield (after deduction of all the running costs except the taxe foncière) of between 3% and 5% per year.

If the developer gives a guaranteed rental income this will be indexed linked and usually the rent will increase by up to 3% annually (more information at www.insee.fr). Most developers cap this increase so the annual increase averages at around 2% for an extended period of several years rental.
Classic Freehold - Running Costs
What are the service charges?
The ‘charge de co-propriete’ (service charge) is typically €10-20 per m2 per year. If the property has facilities such as a swimming pool and a wellness the charge may be at the higher end of the range. 
Staying in France and French Residency
If I do not live in the EU how long can I stay in my French property?
Any property owner in France is entitled to a resident permit. It doesn’t allow you to work or to benefit from the social system but you can come and go as you please. After 10 years you can ask for citizenship or in 5 years if you justify it by a certain level of investment.
Once you have purchased the property, you have to enter France on a 90 days’ tourist Schengen visa which is easy to have when become an owner. Next you must ask the local prefecture (where your property is situated) for a residency card next to the prefecture,
It is fairly straight forward but there is a fair amount of paperwork to fill in as with any administration in France but we can put you in contact with experts who can help. 
Property Types in Switzerland
Are properties "freehold"?
Yes. Even apartments are ‘freehold’. You will have a share of the whole building and the communal parts and an exclusive right to use their own apartment.

 All the apartment owners are bound together in a kind of residents association (known as a “co-propriety”), which sets out the rules of the house (e.g. the laundry room to be used only between certain hours). The owners have complete control over the building and at the annual meeting they will appoint an Administrator who will deal with the day to day running of the property. The annual meeting will set the budget for the forthcoming year, vote on suggestions made by the administrator and apartment owners, and review any problems.

Similar arrangements are often made for a community of several chalets which will often share costs for snow clearance and gardening.
Property Restrictions for Foreigners
Are there restrictions on what I can buy as a foreigner?
Foreigners who are not official residents in Switzerland are permitted to buy a holiday home but only in certain touristic areas in Switzerland. There are also restrictions on the size of the property you can buy but a foreigner who has a Swiss residence permit may buy any property, anywhere in Switzerland.
Where can I buy?
Foreigners are not permitted to buy in the major cities such as Geneva and Zurich, but they may buy in most of the ski resorts in Switzerland. Local restrictions apply so, for example, you may buy in Verbier but not in Zermatt even though both resorts are in the same Canton. Your notary will apply for a permit for you to buy a specific property but only as part of the purchasing procedure.
What can I buy?
There are restrictions on the size of the plot of land (maximum 1,000 m2) and the habitable area of the chalet (maximum around 250m2 net habitable).
Will new properties continue to come on the market?

No. In 2012 in a referendum the Swiss decided that no new building permits should be given for the construction of second homes in resorts where second homes already make up 20% of total property. Therefore no more new properties will be built for the foreseeable future in any of the Swiss ski resorts.

Developments which have already received a building permit will continue to be built over the next two or three years but when these have been sold no more new properties will be built. This affects both Swiss and foreigner buyers.

The new properties we are currently selling are the last opportunity to buy a new holiday home in the Swiss Alps. They will be an excellent investment and will increase in value as new supply dries up.

In which ski resorts can foreigners buy?

Each canton has different rules and these vary from commune to commune even within the same canton.

Grindelwald (Canton Berne)

  • Foreigners are permitted to buy apartments and chalets with a market value of over 750,000 Sfrs

Wengen and Lauterbrunnen (Canton Berne)

  • Foreigners are permitted to buy apartments but not detached chalets
  • Only 50% of the apartments in one building may be sold to foreigners
  • Foreigners may resell at any time
  • There is no minimum purchase price

Gstaad Valley and Villars (Canton Vaud)

  • Foreigners may buy most properties but may not resell for 5 years
  • Foreigner permits are freely available for both re-sale and new properties

Nendaz, Les Collons, Veysonnaz, La Tzoumaz (Canton Valais)

  • We still have the possibility to have a new chalet built to order (old permits granted before 2012)
  • Foreigners must wait 5 years to resell except in special circumstances

Saas Fee (Canton Valais)

  • No new building permits have been granted for foreigners
  • We do have some foreigner-owned re-sale chalets which may be sold to foreigners

Verbier (Canton Valais)

  • There are permits available for foreigners
  • We have new and re-sale chalets and apartments which may be freely sold to foreigners

Zermatt (Canton Valais)

  • Foreigners are not permitted to buy in Zermatt at all
  • The only exception is the 7 Heavens as these chalets are considered as a business and are fully staffed
  • Swiss nationals and foreign residents (B permit holders) are permitted to buy most properties in Zermatt
  • Some properties are strictly reserved for residents of Zermatt who paying their taxes there

Engelberg (Canton Obwalden)

  • Foreigners are permitted to buy in some of these resorts

St Moritz, Davos and Klosters (Canton Graubünden)

  • Generally foreigners are not permitted to buy in these resorts. There is the occasional expetion.
Can I buy more than one property in Switzerland?
No. Foreigners may only buy one property in Switzerland. You are not permitted to buy a second property in the name of your husband / wife but if you have children over the age of 20 they may purchase properties in their own name.
Are there restrictions on reselling?
Yes, in some Cantons such as Valais and Vaud foreigners may be prohibited from re-selling their property within 5 years after they have purchased it. This restriction will be waived if you have a good reason to sell (ill health, financial problems) and you do not make a profit. Some cantons such as Berne and Obwalden allow you to re-sell the property immediately (you may pay a higher capital gains tax in the first 5 years).
Are there any rental obligations on property in Switzerland?
You are free to rent your property (or not) as you wish. The owner, or his friends, or family, are expected to use the property for at least three weeks of the year so the property may not be rented on an annual basis (maximum 11 months and one week). Some larger developments may have a rental scheme.
Purchase Process and Costs
What are the purchase costs?
Notary fees

Switzerland is one of the cheapest countries in Europe to buy or sell a property. The total purchase fees (which include the notary’s fee, land registry fees and taxes) are between 2.5% and 5% of the purchase price and vary from Canton to Canton (see below).

All the purchase costs are payable by the purchaser. The vendor does not pay. When you come to sell your property you do not pay notary fees.

Mortgage registration

This is charged on a sliding scale which varies in different cantons. In Canton Valais it is a straight 1.6% of the amount of the loan. In canton Vaud it is calculated on a sliding scale starting at 0.6% of the amount borrowed but decreasing to 0.44%. When buying a resale property you may take over the existing mortgage deed and avoid the charge for registration. You could borrow from the same bank as the vendor or they could pay the loan off and you can use the mortgage deed to borrow from another bank.

Canton Bern (Lauterbrunnen, Wengen and Grindelwald)
  • Total purchase costs are 3% of the purchase price.
Canton Graubünden
  • Total purchase costs are 2.5% of the purchase price.
Canton Valais (Saas Fee, Verbier etc.)
  • Total purchase costs are 3% of the purchase price
  • Registration of mortgage 1.6% of the loan
Canton Vaud (Gstaad and Villars)
  • Total purchase costs are 5% of the purchase price
  • Registration of mortgage 0.6% decreasing to 0.44% of the loan
What construction guarantees are there?
  • New properties: 5 years for visible construction defects, 10 years for hidden defects.
  • Resale properties: there are no guarantees.
Do I need a lawyer?
An official Swiss notary of the district will act on behalf of both the purchaser and the vendor. You will pay the deposit and all payments to the notary’s account.
Are permits ever refused?
Almost never. This is a formality and the permit is usually given in a few weeks. It would only be refused if you already own another property in Switzerland or the property does not comply with the rules.
What do I need to sign?
When buying a new property off plan you will sign a reservation agreement and pay a small deposit. Whatever you are buying you start by completing a civil status questionnaire giving your personal details to the notary who will then apply for a permit for you to buy the property.

Within 30 days of being allocated a permit you must sign the notary’s deed of sale and pay a deposit.

The notary will send you the deed of sale in French or German with a professional English translation and a power of attorney which authorises his secretary to sign the deed for you. The purchaser and the vendor usually both sign a power of attorney authorising one of the secretaries working in the notary’s office to sign the sales deed on their behalf so there is no need to travel to Switzerland to sign.

The notary will also liaise with the bank for the registration of your mortgage. 
Buying Off-Plan
How does it work if I am buying off-plan?
You will put your money in first and then the bank will make the remaining stage payments as the construction proceeds. Each developer has a different payment structure but typically it would be a deposit of around 30,000 sfrs to reserve a property off plan, 10% when the notary’s deed of sale is signed and then stage payments when the foundations and roof are started. Final payment when the keys are handed over. If you take bank finance then you pay the first 30% and then the bank pays the remaining stage payments.
How much can I borrow from a Swiss bank?
Swiss banks will lend up to 70% of the purchase price. The loan is usually in the form of a current account overdraft secured on the property repayable over 25 years. We can introduce you to a bank which has all the documentation in English and is used to dealing with International clients.

If you are a United States citizen it is very difficult to borrow from a Swiss bank so unless you can buy without a mortgage you should consider buying in a French resort as French banks will still lend.
How much will the bank charge and what are the interest rates?
Swiss banks do not usually charge a setup fee or require any life insurance. The costs for registering the mortgage varies from one canton to another but will be a maximum of 1.6% of the amount borrowed.

Interest is payable every quarter on the capital balance outstanding over that period. The repayments will therefore be higher in the earlier years but will reduce as the capital is repaid. Swiss interest rates are the cheapest in Europe – they are currently less than 1.5% variable rate or fixed at 2% for long term. 
Buying in the Name of a Company
Can I purchase in the name of a company?
No. A foreigner must buy in their name except for some apartments in the Bergsee development which have a special status and may be bought in the name of a company.
Rental Income and Running Costs
What are the annual running costs likely to be?
The annual running costs are not expensive in Switzerland.

The service charges for an apartment building are divided up proportionately between the owners, according to the size of their apartment. These expenses include, the caretaker, maintenance of the building and grounds (snow clearing and gardening), electricity and heating for the common parts. In addition are structural insurance (very cheap in Switzerland) and an allocation to the building’s renovation fund.

The service charge is usually payable annually. Apartments with swimming pools and facilities tend to be more expensive and also the charges vary from canton to canton. Typically they are around 0.5% of the value of the property per year in Valais up to around 0.75% in Vaud. As an example, you would expect to pay around 5,000 sfrs a year service charge for a 3 bedroom apartment.

Additional costs are your own consumption of electricity and water which are cheap in Switzerland as they have hydro-power. Contents insurance is also cheap in Switzerland (there is hardly any crime)!

Chalets are cheap to maintain (particularly if new) as very little maintenance is required.
How easy is it to rent my property?
Local agents can handle the administration, rental and management of your property if you wish to rent. Rental agencies charge around 20% for making bookings so some owners use international rental agents and portals such as Chalets Direct and others even make their own web sites.

Renting your property out when you are not using it will easily provide sufficient income to cover the annual running costs, particularly if you rent out some of the peak weeks (Christmas, New Year, all February, and Easter). In every resort there are companies which will clean and service your property in between rentals.
How much tax will I pay in Switzerland on the rental income?
If you do rent and you chose to complete a Swiss tax form (instead of being assessed on the notional fiscal value) then you will be taxed on the actual rental income received after deducting some expenses and interest on your mortgage. Tax rates vary but you will probably pay around 20% tax.

You may be liable to pay tax in the country in which you are resident but most countries have a dual taxation agreement with Switzerland so you do not pay your tax twice. As above, you would expect to pay almost the same annual tax if you decide to rent your or not. 
Investment and Selling
Is Swiss property a good investment?
As the supply of new second home properties has always been strictly controlled and now the new rules will prohibit all future construction of second homes, Swiss property is a very safe investment. Prices do not increase dramatically but also in troubled times, they do not crash either.

The principal source of profit for foreign investors has been the Swiss Franc, which is one of the strongest currencies in the world. Swiss real estate has historically appreciated on a very steady basis and property in the best ski resorts always appreciates. 
What taxes are applicable for property resale?
In the case of resale, the property is subject to an appreciation tax on the difference between the sales price and the total purchase price (including fees and special renovations or improvements to the property). Deductions can be made for commission to the real estate agents and other costs. The rate of the capital gains tax decreases with each year of ownership, starting at 30% (if you sell within a year) and decreasing to 9% after 10 years and 1% after 25 years.

You may be liable to pay tax in your country of domicile but Switzerland has a dual taxation treaty with most countries so you will get a credit for any tax paid in Switzerland so you do not pay tax twice. 
How does inheritance work on properties in Switzerland?
Unless you become a Swiss resident, the property will devolve in accordance with your wishes. We would advise that you have a separate will which deals specifically with the Swiss property and a copy of this should be lodged with the Swiss notary.

Inheritance tax is payable in Switzerland but is much lower than in the UK and most European countries. Inheritance tax is a cantonal tax and varies from one canton to another. In most cantons there is no tax between spouses and in Canton Valais (Verbier) there is zero inheritance tax if the property is willed to direct line descendants.

In Canton Vaud (Villars) the tax is progressive - starting at 1.8% for property valued at up to 500,000 Sfrs, rising to 5.068% if the fiscal value of the property is over 1m Sfrs. If the property is registered in the name of more than one person, then tax would be payable only on the share of the property owned by the deceased.

However, as is always the case (in whatever country you may own property) where there is a dual taxation treaty, you would be liable to pay tax in the country in which you reside and be given credit for any tax paid to the foreign (Swiss) government.
Annual Property Taxes
What are the annual property taxes?
Foreigners owning a property in Switzerland pay taxes to three bodies - the Federal Government, the Canton, and the Commune. The Canton and local commune taxes vary. Owners have a choice of completing a tax declaration disclosing their worldwide assets or being assessed simply on the fiscal value of their Swiss property. Most owners elect to be assessed.

The tax is calculated on notional rental value of the income which could be derived from the property. That is based on the fiscal or “tax value” of the property (about 60% of the market value). Using this calculation, the total annual taxes are around 0.5% of the market value of the property in Valais but in Vaud taxes are slightly higher at around 0.8%.  Canton Valais does not re-assess the fiscal value of properties so you will probably pay the same tax in 10 years’ time as you do today but Canton Vaud revalue properties about every 5 years.

As an example, you would expect to pay total taxes of around 5,000 sfrs a year for a 3 bedroom apartment in Valais and you will pay almost the same annual tax if you decide to rent your apartment or if you prefer to keep it exclusively for your own use.
Staying in Switzerland and Swiss Residency
How long can I stay in Switzerland?
EU citizens may occupy their property for up to six months per year. If you wish to spend more time in Switzerland you would need to apply for a residence permit.
Can I become a resident of Switzerland?
It is much easier for EU passport holders to work and/ or reside in Switzerland than other nationals. There are two types of permit - a B permit which gives you the right to reside in Switzerland (but not to work) or a permit which gives both the right to work and residency. When you have obtained a Swiss residence permit you may buy a property which would otherwise not be available to purchase by a foreigner. A useful book if you are considering retiring or working in Switzerland is ‘Living and working in Switzerland’ by David Hampshire (available from Amazon).
Working in Switzerland - you will need a contract of employment from a Swiss company or you could establish your own company or be self-employed but you will need to show that you are creating employment for Swiss nationals have an annual income of over 50,000 Sfrs.

Retiring in Switzerland - you can obtain a B permit if you are over the age of 50 and you can show that you have sufficient financial means and have a private Swiss health insurance cover (it costs around 120 sfrs per month). You must also pay tax in Switzerland. This is known as a “taxe a forfait” and is a fixed 5 year tax deal which your advisor will negotiate in advance with the local tax office. Resorts such as Crans Montana in Valais offer very good tax arrangements and this is a lovely, sunny dual season resort with a golf course so it is also a good choice for retirement.

EC residence permits are valid for five years and will automatically be renewed if the requirements are still satisfied.

NON EU Passport holders – applications are reviewed case by case but generally the requirements, if retiring, are to have reached retirement age (60 years old), not to work in Switzerland, to prove one has sufficient financial means to live in Switzerland without working and to have personal ties in Switzerland.
Property Types in Austria
What are the buying options?
Second Home
If you prefer not to rent your property, we are able to offer a small selection of properties that have a rare “second home” permission, which means you have no obligation to rent.

Fully Managed
Some properties offer a fully managed rental service where the developer teams-up with a large tour operator who will efficiently handle all your rentals when you are not using your property and then pay you a quarterly or monthly income as well as handle all your bookkeeping. As an owner you simply book your forthcoming winter and summer dates in advance and the tour operator will do the rest… With fully managed properties sometimes the tour operator will offer a guaranteed rental return for a fixed period of time. 

Flexible Renting 
If you want to maximise the personal use of your property and are looking for complete flexibility, then a property with a flexible rental option is perfect. In this way you can either rent your property through a local tour operator, or rent privately. If you chose a tour operator, they will advertise your property, manage your online bookings, meet and greet your guests, and deal with the laundering and cleaning of your property when your guests have departed. If you chose to rent privately, you can make your own web site to advertise your property, or advertise on a holiday rental portal, of you can rent privately to friends and family.
Property Restrictions for Foreigners
Can EU Citizens purchase a holiday home in Austria?
Yes, EU citizens can buy a holiday property in any of Austria’s nine Provinces and the process is very straightforward.
Can Non-EU Citizens purchase a holiday home in Austria?
If you are a non-EU Citizen then there are restrictions on what you can buy. It is possible to buy a property with a ‘second home’ status, and although these properties are extremely rare to find, we have a selection on our web site to choose from.

It is not possible for non-EU citizens to buy in The Tyrol, Vorarlberg, or Salzburg Provinces. It is possible to buy in the Carinthia province however and you would need to apply for a foreigner purchase permit, which usually takes a couple of months.

Alternatively, it is possible to buy in the name of an EU Company.
Purchase Process and Costs
What is the purchase process?
  1. The process of buying a property in Austria is very straightforward. The notary will act on behalf of both the purchaser and the vendor, he will draw up the deed of sale and all the documents required to transfer the legal ownership.
  2. When buying a property, both the purchaser and the vendor are required to attend the notary’s office to sign the deed of sale in his presence. Alternatively both parties can sign a power of attorney authorising one of the secretaries working in the notary’s office to sign the sales deed on their behalf. In this case the buyer will receive from the notary a copy of the deed of sale in German and a professional English translation along with a power of attorney (also in English) which authorises the notary’s secretary to sign on their behalf.
  3. The buyer will need to take the power of attorney to either a Notary Public (not a solicitor) in their country of residence to have their signature witnessed and (in the UK) the Notary Public will send the document off to the foreign office to have it ‘legalised’. Alternatively, documents can be signed and legalised at the same time if taken to the Austrian Embassy.
What are the purchase costs?
Purchase costs for buying a property in Austria work out about 6.6% of the gross purchase price. The purchaser will be required to pay the notary fees after the contract of sale has been signed.

Fees are calculated as follows:
  • Purchase Tax ‘Stamp Duty’ – 3.5% of the gross price
  • Registration in the Land Registry – 1.1% of gross price
  • Notary’s fees – between 1.5 and 2% of gross price
  • Court costs, administration fees – approx. 150 euros
What construction guarantees are there?
All new build Austrian property are covered by a 30 year building guarantee against all building defects, and developers will usually guarantee building fixtures for two years.
What are the payment structures?
New build properties are paid for in stages and all payments are made through the notary who acts as trustee for your money. The instalments are made into a client account and the payments for each stage are only released from the client account when an independent surveyor has inspected each stage and officially signed it off with the notary.
Purchase payments will typically be something like this:
  • 15% at start of building works
  • 35% on completion of the shell and roof
  • 20% on completion of plumbing and electrical installations
  • 12% on completion of the façade & windows
  • 12% on completion of the property
  • 4% on hand over of keys
  • 2% after three years (or after developer providing a bank guarantee or insurance to the purchaser)
What is the construction schedule?
Construction in the Alps only takes place in the summer months, as during the winter months the ground is frozen and covered in snow. Because of this, Alpine developers optimise their build schedule and usually build and complete an apartment building or several chalets in one summer season.

The advantage to buyers is that during the winter they can sign their purchase contract to secure their property but will not have to start making stage payments until construction starts in the spring.
Should I take a mortgage?
If you intend to rent your property then there are tax advantages if you take a mortgage as you may offset the interest against rental income (which will no longer be permitted for UK property from April 2017). As your rental income will be in Euros you do not have any currency exposure if you intend paying your mortgage from rental income.
How much can I borrow?
Austrian banks will fund up to 60% of the purchase price and usually the loan period will be between 15 and 25 years.  It is also possible to take fixed rate mortgages for 1 or 5 years.
What are the charges and interest rates?
Some banks charge a set-up fee and this is usually around 2% of the value of the loan. They will also charge an appraisal fee of 0.5% and you will need to pay the notary a fee of 1.5% of the amount of the mortgage to register the mortgage in the land registry.
Variable rates are around 3%.
Buying in the Name of a Company
Can I purchase in the name of a company?
Yes, there are no restrictions in Austria if buying in the name of an EU company. 
What are the benefits?
  • Purchase a property with multiple partners – If you want to buy a property with more than two owners then buying in the name of a company is a good option.
  • Tax-free ownership transfers – Ownership can be transferred tax free (to children or grandchildren, for example) by a transfer of shares.
What are the costs involved?
The set up costs for an EU company start at around €1,000 and you will be required to pay a yearly maintenance fee of around €800 as well as formalities such as holding an Annual General Meeting.
Rental Income and Running Costs
What are the annual running costs likely to be?
The expenses of a development of chalets or an apartment building are usually divided up proportionately between the owners, according to the size of their property.

As a rough guide the basic running costs for a property usually work out around 3-5 euros per m2/month and this would cover the cost of snow clearance, rubbish removal, water rates, building insurance, and local property taxes, cleaning and lighting for any communal areas, and maintenance of the gardens etc.

These expenses would not include your own personal usage of heating and electricity as this varies depending on how much you use the property.
If you buy a property with extensive leisure facilities such as swimming pools and spas then these costs could increase to around 7-11 per m2/month.
How much can I expect to receive in rental income?
Austrian gross rental yields tend to vary between 4 and 6%.
Rental Obligations
Do I have to rent my property?
Most holiday homes in Austria are obliged to be rented when their owners are not using them. This is because the tourism industry forms an important part of Austria’s economy accounting for over 15% of its GDP.

It is because of this important tourism industry that the Austrian government does not want owners of chalets to leave their properties empty for large parts of the year. Owners who do not live permanently in the mountains are encouraged to make sure that their property is regularly visited by holidaymakers as it is important for the local infrastructure of the villages to have a good flow of tourism.
Tax advantages - how do I get the VAT back?
Renting your new-build property can have tax advantages as it is possible to reclaim part, or all of the VAT on your purchase, giving a discount of up to 20%. To be eligible for this VAT discount you would be expected to rent your property professionally when you are not using it and you will need to show an overall profit over a period of 20 years.

You are permitted to claim back all the VAT - the full 20% - if you rent your property commercially and do not use it yourself. If you declare in advance that you will be using the property partly for your own private use then the amount of VAT you can reclaim depends on the ratio of personal use to rental use.

To reclaim the tax you will need to register for VAT, and in some cases pay the gross price and then claim the tax back. This usually takes two to three months and you will be appointed a tax advisor to help you with this. It is possible to obtain a bridging-loan for this if required, however in some of the property we sell this is not necessary as the developers will have pre-arranged everything for you so you will only need to pay the net price.  
What taxes will I have to pay?
If you decide to take advantage of the VAT rebate and rent your property to holiday-makers you will be required to pay income tax on your rental income. Much of these taxes can be offset and there are a number of ways to reduce the tax you pay on your rental income.

For example, the interest you pay on your mortgage can be written off against rental income profits and you can also write off 10% of the costs of your furniture package as depreciation against your rental income.

If you rent your property to holiday-makers and pay the income tax for these rentals in Austria then there is an 11,000 euro income tax exemption per person per year, so if two people purchase a property together there is a tax free allowance of up to 22,000 euros per year. If you claim the VAT back on your purchase you will also be required to become VAT registered with the tax authorities for 20 years, but after this time you can de-register and will no longer be required to make annual tax returns. You will need to charge VAT at a rate of 10% on your rentals which can then be reclaimed each quarter upon the filing of accounts.

We always recommend a choice of local tax advisors to help with your tax returns. The tax advisor will charge a one off fee to set up your registration (please contact advisors directly for prices) and annual tax returns will cost in the region of 300 – 500 euros per year.

Tourism Tax:
When you rent your property you will need to charge your guests tourism tax for the nights they spend in your property. These rate of tax varies from resort to resort but as a rough guide it is somewhere between 1 and 3 euros per night per person for each guest over the age of 14 years.

Capital Gains Tax:
The housing market in Austria has been subject to a number of controls in order to keep house prices within reach of locals, especially in the tourist areas. Capital Gains Tax of 30% will apply to any profits you have made on your property (effective since Jan 1, 2016).

Inheritance Tax:
Inheritance tax has been abolished in Austria (effective since August 1, 2008).
Investment and Selling
Is Austrian property a good investment?
Austria is fast becoming the intelligent investor’s business decision. Austrian property offers superb rental income potential for buyers, with one of the benefits being that it offers great dual seasonality with two high seasons in one year: winter for ski holidays, and summer for hiking, cycling and swimming in the warm lakes. 
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