Real Estate Gains Tax in Switzerland: Which Costs Can You Deduct?

Learn which costs are deductible for real estate gains tax in Switzerland. Discover value-adding investments, cantonal rules, and how to lower your tax burden when selling property.

Selling a property in Switzerland often comes with a significant tax bill. The real estate gains tax is one of the key charges to consider, but property owners can reduce their taxable profit by deducting certain expenses. In this guide, you’ll learn:

• Which costs are deductible nationwide.
• How rules differ between cantons.
• Why distinguishing between value-adding and value-preserving expenses matters.
• How to calculate your tax burden with the help of a simple formula.

What Is Real Estate Gains Tax?

In Switzerland, real estate gains tax applies whenever a property is sold at a profit, provided the transaction does not fall under an exemption such as inheritance, donation, or a tax-deferred replacement purchase.

Unlike income tax, which is levied annually, real estate gains tax is triggered by a single event: the sale. Its purpose is to ensure that profits from rising property values are fairly taxed, regardless of whether the property was used as a primary residence, rented out, or kept as an investment.

Cantonal Differences

Taxation varies significantly depending on where your property is located:

• Private property sales: In all cantons, these are subject to real estate gains tax.
• Business-related sales: Some cantons treat these under income or corporate profit tax instead. For example: in most cantons, a professional developer or real estate company will not pay real estate gains tax, but will instead include the gain in their ordinary business taxation. 
• Rates and deductions: Each canton sets its own rules. The same cost might be deductible in Zurich but not in Geneva.

This makes it essential to check the cantonal tax law before selling.

How Is the Real Estate Gains Tax Calculated?

Step 1: Determining the Taxable Gain

The taxable gain is the difference between the sale proceeds and the investment costs.

Investment costs include:

• The original purchase price of the property.
• Value-adding investments, such as renovations or extensions.
• Deductible transaction costs linked to buying and selling.

Formula: 

Taxable Gain = Sale Price – (Purchase Price + Value-Adding Investments + Deductible Costs)

Step 2: Applying the Tax Rate

Once the taxable gain is known, the canton applies a real estate gains tax rate. This rate depends on several factors: 

• Taxable gain: In most cantons, the real estate gains tax rate goes up with taxable gain. 
• Holding period: In almost all cantons, real estate gains tax goes down the longer you've owned the property. 

In effect, the real estate gains tax is designed to discourage speculation. Selling after only a few years can mean a very high tax rate, sometimes over 40%. By contrast, holding a property for 20+ years often reduces the rate dramatically. 

Formula: Property Gains Tax = Taxable Gain × Tax Rate

Which Costs Are Deductible from the Real Estate Gains Tax?

The biggest opportunity to reduce your taxable gain lies in claiming every deduction available. Deductible costs generally fall into five categories: value-adding investments, transfer costs, brokerage and marketing fees, owner contributions, and legal or contractual obligations.

1. Value-Adding Investments

These are expenditures that permanently increase the property’s value and therefore count as part of the investment costs.

Examples include:

• Building an extension or adding a new floor.
• Renovating kitchens or bathrooms to a higher standard.
• Installing solar panels or upgrading heating systems to improve energy efficiency.
• Infrastructure improvements such as retaining walls or shoreline protections.

💡 Important distinction:

• Value-adding costs → deductible for real estate gains tax.
• Value-preserving costs (repairs, maintenance, replacing old installations) → usually deductible only for income tax, not for real estate gains tax.

However, some cantons allow value-preserving costs in the first years of ownership to be deducted, provided they weren’t already claimed against income tax.

Even the owner's own labor can be deductible in certain cantons, but only if it is properly invoiced and declared as taxable income.

2. Property Transfer Costs

Whenever a property changes hands, transaction costs arise. These can be deducted if directly tied to the transfer of ownership.

Typical examples:

• Notary fees for drafting and certifying contracts.
• Land registry fees in some cantons.
• Stamp duties or property transfer taxes, where applicable.

3. Brokerage and Marketing Costs

Selling real estate almost always involves marketing expenses. These costs are deductible if they were necessary to achieve the sale.

Examples:

• Brokerage commissions (typically 1–3% of the sale price).
• Advertising costs, such as online listings or print media.
• Costs for professional photography or floor plans, if required for marketing.

4. Owner Contributions

Property owners must sometimes contribute to public infrastructure projects. Many cantons allow these costs to reduce the taxable gain.

Deductible examples include:

• Municipal contributions for road construction, sidewalks, or sewage systems.
• Connection fees for utilities such as water, electricity, and gas.
• Payments for local infrastructure projects where the property benefits directly.

The specific rules vary widely. For example: 

• In Zurich (ZH) and Aargau (AG), connection fees to public networks are deductible.
• In Bern (BE) or Ticino (TI), contributions to municipal infrastructure are deductible under certain legal frameworks.

5. Legal and Contractual Costs

Certain legal and documentation costs can also be deducted, depending on the canton:

• Mortgage certificates and property liens.
• Property appraisals required for the sale.
• Contract drafting costs (co-ownership agreements, sale contracts).
• Seller’s obligations if specified in the sale contract, such as covering unpaid services or shouldering specific buyer-related costs.

6. Taxes, Fees, and Compensation Payments

Finally, some cantons allow deductions for taxes and fees directly tied to the transfer:

• Transfer taxes and fees related to liens or easements.
• Notarization costs and official permits.
• Compensation payments if they are part of the contractual transfer.

Why Deductible Costs Matter

Real estate gains tax can run into tens of thousands of francs for high-value properties. Every deductible cost you can claim reduces the taxable profit and therefore lowers your tax bill.

For example:

• Sale price: CHF 1,200,000
• Purchase price: CHF 800,000
• Deductible costs (renovations, notary, brokerage): CHF 100,000
• Taxable gain = CHF 300,000

Depending on your canton, the tax could range anywhere between CHF 30,000 and CHF 90,000. Properly recording your deductible expenses can make a huge difference.

Conclusion: Know the Rules Before You Sell

Deductible costs are one of the most powerful tools to minimize your real estate gains tax in Switzerland. However, because each canton sets its own rules, what qualifies in one canton may not be deductible in another.

To avoid surprises:

1. Keep all invoices and receipts for investments and transaction costs.
2. Check cantonal regulations before making deductions.
3. Use a tax calculator and consult with a real estate professional to estimate your liability early in the selling process.