Can I as a Foreigner Keep a Mortgaged Home in Switzerland After I Leave the Country?

Dear Moneyland

I came accross one of your excellent articles and that was great (Leaving Switzerland? 7 important financial questions answered).

I'm recently researching a closely related senario but more complicated. I have permit B, purchased an apartment, have a morgage and have a pension 3a account. So when I leave Switzerland (aka, no more permit of any kind):

1. Do I have to sell the apartment because I can no longer live there?
2. If "yes" to the first question,  do I have to pay a tax because I sell it too soon (say within five years)?
3. If "no" to the first question, can I rent it out?
4. Can I keep my morgate and pay the interest as usual?
5. How do I pay tax?  I have virtual income because I own property and at the same time I pay interest to the morgate
6. What are the typical company (housing agency maybe?) that can manage the renting on behalf of me?

Emm, owning a property without permit C just makes leaving Switzerland 10 times harder.   I wonder if that worth an article?  If not, at least I sort my head clear by writing all these questions out. Haha

Hi there,

You can find basic answers to your questions here. For further information, it may be helpful to consult a financial advisor and/or a tax consultant which can provide advice based on your specific situation.

1.  Do I have to sell the apartment because I can no longer live there?

Non-residents are entitled to own property in Switzerland, but some restrictions may apply. These restrictions vary between cantons, so you should inquire about this at your cantonal land registry office.

2. Do I have to pay a tax because I sell it too soon?

When you sell real estate in Switzerland, you pay a property gains tax on the capital gain achieved through the sale (the profit you make on the sale above the price which you paid). You pay this tax regardless of the length of time for which you owned the property and regardless of your citizenship or residence status. This tax is levied by cantonal tax authorities. Some municipalities also levy this tax. Inquire at your municipal tax authority about the applicable property gains taxes.

3. Can I rent out my property in Switzerland?

Yes, as the owner of a property in Switzerland you have the right to rent out your property if you so choose. Note: Some cantons and municipalities place restrictions on certain types of rentals such as short-term rentals (Airbnb and co.). You can enquire about possible restrictions at your municipal office.

4. Can I keep my mortgage and pay the interest as usual?

The majority of Swiss banks generally do not accept mortgages from mortgagors residing outside of Switzerland. This holds true for both Swiss citizens and non-citizens residing abroad. Reasons for this include difficulty in determining whether mortgagors continue to meet affordability requirements, and the added administration involved in servicing non-resident mortgagors.

However, there are banks which are more accommodating in this regard. The Association of Swiss Abroad publishes a list of banks which are open to dealing with non-residents, and this list indicates which Swiss banks are open to accepting mortgages on properties in Switzerland from non-resident mortgagors. However, this list only serves as a basic guide, as it is primarily designed for Swiss citizens residing abroad. You can find the list here (in German - last updated in 2016):

A good first step would be to inquire about your current mortgage provider's policy on mortgages for non-residents.

IMPORTANT: When you leave Switzerland and stop making Swiss social security contributions, you will no longer be eligible to make contributions to the third pillar (your 3a account). If your mortgage is currently amortized through the third pillar, you should bear in mind that you will not be able to continue to use indirect amortization after you leave Switzerland. However, because you will no longer pay income and wealth taxes in Switzerland after you leave, the benefits of using indirect amortization will no longer be relevant.

If you are not able to keep your current mortgage or to refinance it with a mortgage from a more accommodating Swiss lender, you could consider applying for a loan in your new country of residence and use it to refinance your Swiss mortgage - assuming you can obtain a loan at a reasonable interest rate. Some lenders accept overseas property as collateral, in which case you may obtain a better rate.

5. How do I pay tax?

As a non-resident, you are exempt from most Swiss taxes - including income tax and wealth tax. This makes the Swiss tax deductions for mortgage debt irrelevant for Swiss tax purposes.

Many cantons levy a property tax which you must pay in the canton in which your property is located - even if you are not resident in Switzerland.

The following cantons which do not levy a property tax: Aargau, Basel-Landschaft, Glarus, Solothurn, Zug, Zurich. If your property is in one of these cantons, you may not be obligated to pay any Swiss taxes at all. Enquire at your local tax office for more information.

6. What are the typical companies that can manage the rental on my behalf?

Numerous property management firms (German: Immobilienverwaltung, French: Gestion immobilière) operate in Switzerland. These firms manage the search for renters, collection of rent, property upkeep and maintenance, relations with renters and in some cases also periodic renovations on behalf of landlords. In exchange for their services, these firms charge a fee. Typically, this fee is equal to a percentage of rental income.

The rates charged by different property management firms vary, but average 4% to 5% of rental income. Consider getting quotes from a number of different firms and comparing the fees and the services offered.

Best regards from Moneyguru

More on this topic:
Interactive mortgage comparison
Leaving Switzerland? 7 important financial questions answered
10 things to consider before buying a home in Switzerland
Guide to real estate crowdinvestment in Switzerland

Hi Moneyguru, thank you for this and other articles. Very helpful.

Regarding point 3 above, renting out my apartment after leaving Switzerland, does this also apply to non-EU citizens that held a permit B?

thanks again

Hi davidgavin,

As a non-EU citizen with a B permit, you are allowed to purchase a single property in Switzerland for sole use as your primary residence.

When you purchase the property, you are required to submit a form stating that the property will be used as your primary residence. A renter registering as being resident in the property contradicts the statement that the property is used as your primary residence.

While the above rule applies countrywide, further rules detailing ownership of property by foreigners vary between cantons and even municipalities. If you are planning to leave Switzerland, contact your municipal office and explain the situation. They will inform you as to your options.

Best regards from Moneyguru