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I recently purchased an apartment in Switzerland. In buying the apartment I also bought into the building renovation fund or “Erneuerungsfonds”. Because the building has not been renovated for close to 15 years, the money held in the fund is substantial.
My question is, do I need to declare the money in the building renovation fund as wealth for tax purposes?
Yes. While wealth taxes and the exact rules regulating them vary between cantons and municipalities, you are generally required to tax your share of the money held in building renovation funds.
What portion of the assets held in the collective fund counts towards your personal wealth depends on your co-ownership share in the building. For example, if your co-ownership share in an apartment building is 100/1000 and the building’s renovation fund contains 200,000 Swiss francs, then 10% of the fund, or 20,000 francs, must be counted towards your personal wealth for tax purposes.
It is worth noting that contributions towards a building renovation fund can be deducted from taxable income as renovation expenses with regards to federal income tax.
Deductions for cantonal income tax vary. In the Canton of Zug, for example, your share of contributions can be deducted from your taxable income (federal and cantonal) if collective annual contributions do not exceed 0.5% of the building’s notarized value. The value of the fund cannot exceed 10% of the building’s notarized value.
