What is the tax value and does it relate to the selling price?

What exactly is the assessed value of a property for tax purposes?

The assessed value of real estate (also called cadastral value, official value, or tax value, depending on the canton) is a purely administrative figure. It serves as the basis for calculating wealth tax for the cantonal tax authorities.

Since real estate in Switzerland is considered an asset, it is subject to taxation. But how much is a house worth? Because the tax office cannot reassess every house each year, formulas and standardized valuation models are used. The assessed value of a property is therefore determined at a desk, based on land value tables, the year of construction, the volume, and the standard of finish.

It's important to know that the assessed value of a property for tax purposes almost always lags behind reality. Appraisals are often only updated every 10 to 15 years. In a market where prices can rise by 50% in ten years, the assessed value of a property often remains at an outdated level.

The rule of thumb: tax value vs. market value

Does the assessed value of a property have anything to do with its selling price? Yes and no. It correlates with it, but it doesn't reflect it exactly. As a general rule of thumb in many cantons: The assessed value of a property is usually significantly lower than its market value.

The authorities usually aim to set the assessed value of a property at around 70 to 90 percent of its market value. In practice, especially in cantons with rapidly rising prices, such as Zurich or Zug, the assessed value of a property is often only 40 to 60 percent of the actual market price.

Why is this the case? The government wants to avoid a flood of appeals . If the assessed value of a property were exactly at market level, every owner would demand a reduction at the slightest market fluctuation. A lower assessed value serves as a buffer and ensures administrative efficiency. For you, this means: If your assessed value of your property is 800,000 Swiss francs, the selling price could easily be 1.2 or 1.4 million Swiss francs. Anyone using the assessed value as the asking price is giving away hundreds of thousands of francs.

The cantonal patchwork

Switzerland wouldn't be Switzerland without federalism. How the assessed value of real estate is calculated varies completely from canton to canton.

• Canton of Zurich: Here, the assessed value of real estate is based on a formula that takes into account the land value and the current building value, often adjusted using sales price databases. The aim is a Tax value Property valued at approximately 70% of its market value .
• Canton of Bern: Here, the term "official value" is used. This is often notoriously low and far removed from the market value, which is advantageous for wealth tax purposes, but leads to discussions regarding imputed rental value.
• Other cantons: Some make greater use of income-based valuation components, especially for multi-family houses.

So, if you're talking to a friend from another canton about the assessed value of a property , you're comparing apples and oranges. A high assessed value in Aargau doesn't necessarily mean the property is more valuable than one with a low assessed value in Valais.

When is the assessed value of a property important for tax purposes?

Even though the assessed value of a property is a poor guide for the selling price, it plays a major role in other areas.

• Wealth tax: The higher the assessed value of your property , the more wealth tax you pay annually. Here 's how it works. a Deep value in your interest.
• Inheritance tax: In cantons that still levy inheritance or gift taxes, the assessed value of the property is often the basis for calculation. A low Tax value Property protects Here is the inheritance.
• Imputed rental value: The imputed rental value (the fictitious income you have to pay taxes on) is often derived as a percentage of the assessed value of the property . If the assessed value of the property increases due to a reassessment, your income tax bill will usually also increase.

The dangers of dividing an inheritance

A classic scenario where the assessed value of real estate causes disputes is inheritance division. For example, one child inherits the house, while the other receives a cash payment. If the family agrees on the assessed value as the basis for the division, the child with the house is significantly favored because the actual market value is much higher. The child receiving the cash payment is disadvantaged. In inheritance disputes, the assessed value should therefore be disregarded, and a current market value should be determined by experts. The assessed value is not a fair basis for distribution in this case.

Property valuation and sale: The capital gains tax

When a property is sold, its assessed value indirectly comes into play again, albeit in a different form. The capital gains tax is calculated as the difference between the sale price and the acquisition costs (original purchase price + investments).

If you've inherited a property for which no historical purchase price is known (e.g., because it's been in the family for 50 years), some cantons use the assessed value of the property at a specific point in time as a substitute . If this historical assessed value is very low, the calculated profit, and therefore the tax burden, will be extremely high today. As you can see, the assessed value of a property is a double-edged sword. A low value saves on wealth tax today, but can drive up capital gains tax tomorrow.

Set selling price: Ignore the tax value

When setting the asking price for your house, you should disregard the assessed value of the property . It's a bureaucratic tool, not a market-based one. Buyers are interested in location, condition, the specific surroundings, and supply and demand. They rarely ask about the assessed value of the property , except to estimate their future tax burden.

The only exception is if the assessed value of the property is extremely high (higher than the planned selling price), something is wrong. Then you've been paying too much tax for years. In this case, you should file an objection to the assessment, even if it's secondary to the sale itself. But the assessed value of a property is simply not a reliable indicator of its market value.

Conclusion

The assessed value of a property and its selling price are two different things. While the selling price reflects current market dynamics, the assessed value is a sluggish, administrative figure used to calculate wealth tax. In Switzerland, it is intentionally set below the market value – often by 20 to 40 percent.

the assessed value of your property as the basis for a sale will cost you money. Using it without reflection when dividing an inheritance will disadvantage your co-heirs. Consider the assessed value of your property for what it is: a figure used for tax purposes, not a price tag for your home.

If you want to know the actual market value beyond the tax assessment, Loft offers you independent and market-based valuation methods.

Glossary

• Property tax value: The officially determined value of a property, which serves as the basis for wealth tax. It is determined by the cantonal authorities. tax authorities determined .
• Cadastral value: A synonym for tax value, which is common in some cantons (e.g. Bern, Valais).
• Market value: The price that can currently be achieved under normal market conditions. It is most clearly above dem Tax value Property .
• Imputed rental value: A notional income that homeowners must declare for tax purposes. Its amount is often derived directly or indirectly from the assessed value of the property .
• Repartition factor: A factor used in some cantons to adjust the tax value of real estate to the general price level without re-evaluating each property individually.