Misconception when buying a house: "The financing is done with the mortgage."

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There are many preconceived notions when it comes to real estate finance. We are confronted with this every day. But what is it really? Today we ask Dashnim Sopi, branch manager at MoneyPark in Baden: Do I really have to take care of the financing once I have my mortgage under wraps?

In fact, the mortgage is a very important part of financing. However, it usually runs over a long period of time in which a lot can happen. Household income can change due to disability or death, income can be lost if the family grows, and affordability in old age can become an issue, to name just a few examples. You should also consider these risks in your financial planning. There are different ways to protect yourself. At the same time, as the owner, you can optimize your taxes with just such measures. How you deal with the maintenance of your property is also an important financial question, especially with regard to taxes.

Saving with a system – the 3rd pillar

Saving with the 3rd pillar has many advantages. On the one hand, because the savings can be used to amortize the mortgage in the event of a stroke of fate. On the other hand, because it offers the opportunity to protect the family, for example in the event of disability or death. And third, because you can use it to optimize taxes.

In Switzerland, anyone who has an income from work can deduct a certain amount for retirement provision on their tax return every year. You can pay these contributions to banks or insurance companies. The 3rd pillar savings may be withdrawn under the following conditions:

For the acquisition, to reduce the existing mortgage or for conversions and renovations of owner-occupied residential property,
when starting self-employment,
from five years before regular retirement,
in the event of disability,
when you emigrate.

As the pillar 3a contributions paid can be deducted from taxable income, tax is due again when you withdraw them, but at a reduced tax rate.

In contrast to pillar 3a, contributions to pillar 3b can hardly or only to a limited extent be deducted from income. However, the payout is tax-free. Another advantage of Pillar 3b is the free choice of beneficiaries in the event of death. Unmarried couples are increasingly buying their own home. In this case, the benefits of pillar 3a are often limited and in the event of inheritance, high inheritance taxes may be due.

Renovating with a system

Value-preserving measures, such as replacing the kitchen, can be deducted from taxable income. From a tax point of view, it makes sense not to carry out all upcoming renovations in the same year, but to stagger them. Investments that add value, such as the extension of a winter garden, can be taken into account in the property gains tax in the event of a later sale. The decision as to whether investments are value-increasing or value-preserving is usually the responsibility of the respective tax authorities, which is why preliminary investigations make sense. In addition, certain energy investments are subsidized by the state. The mortgage is usually increased to finance major renovations. Make sure that you coordinate the expiry of your mortgages so that you are not tied to a mortgage provider when you renew.

A lot can happen over time. That is why it makes sense to do an overall analysis and sort out the situation when it comes to such a big undertaking as buying a house. At MoneyPark, we know all of these topics and are happy to support you – directly when buying a house and also if you already have the mortgage and just want to optimally cover the risks.

Dashnim Sopi
Branch manager Baden
[email protected]