Marginal Tax Rate Rent or Buy Mortgage Calculator

Dear sir/madame,

I used your "rent or buy" calculator to get an idea of whether buying might be cheaper than renting in Switzerland. I have two questions about the calculator:

Marginal tax rate:

Should I enter a marginal tax rate for taxes related to owning a property? For example, should I state the marginal tax rate based on imputed rental income, interest deductions, etc? Or should I only enter a marginal tax rate which does not take ownership into account (if I rent a home)?

Property Expense Tax Deduction:

I imagine the cost of water and electricity should not be accounted for in this deduction - am I right? By water and electricity I mean the variable utility costs which I would also have in a rental home.

Thank you for taking the time to clarify these things.

Kind regards

Hi there,

Those are good questions.

To answer your first question:

The marginal tax rate used by the calculator denotes the tax rate which applies to your taxable income when you rent and when you buy. The difference in tax can be positive or negative.

For example, if your taxable income remains constant at CHF 90,000 when you rent and at CHF 100,000 when you buy, the marginal tax rate entered is applied to the CHF 10,000 difference. In this scenario, the tax difference is made up of the additional taxes that apply when you buy as opposed to renting. The tax difference calculation also accounts for flat-rate deductions for property maintenance costs when you buy, and for returns on your capital (which would make up the down payment if you buy) when your rent.

The answer to your second question:

Work out an annual average for the costs of electricity and water ussage and enter these in the "annual supplemental costs" field under "optional information" in the "Home rental information" section to include them in the calculation.

Best regards from Moneyguru

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