Transferring your house to your children: costs, care, time limits

Three routes lead to the same result. The parents give the house as a gift (Schenkung), with nothing given in return.¹ They transfer it as an advance on inheritance (Erbvorbezug), a lifetime payment set off against the estate.² Or they sell it below market value.

In law, a gift is any transfer where someone reduces their own assets without getting equal value back.¹ For a house, it needs the same form as a sale: a notarised deed. It only takes effect once entered in the land register, not on signing.¹

If the price is clearly below value, it is a mixed gift (gemischte Schenkung): part sale, part gift. For Zurich property gains tax, it is regularly assumed above a 25 per cent difference.³ For supplementary benefits, a price below 90 per cent of the value is already enough.⁷

What this means for you: even a gift to a child generally counts between siblings as an advance on the inheritance (Ausgleichung). The only exception is if the parents expressly exempt it.²

If a parent later needs a care home, supplementary benefits often matter. They top up a low income in old age. Gifting the house, or handing it over below 90 per cent of its value, is a waiver of assets (Vermögensverzicht).⁷ The difference counts as if the parents still had it.⁷

This amount falls by CHF 10,000 a year, with no fixed end date.⁵ It also counts towards the CHF 100,000 asset threshold for a single person. Above it, there are no benefits.⁸ An own house that the parents or a spouse still live in does not count towards it.⁸

A retained right of residence or usufruct counts as income at its yearly value.⁸ See right of residence or usufruct and care in later life. Well-off children can also be obliged to support their parents, house or no house.¹⁵

What this means for you: even an old gift counts until the amount has run down. Sometimes keeping the house is the better choice.

The compulsory share (Pflichtteil) protects a spouse, registered partner and children from losing out.⁹ Since 2023 it is half the statutory share. For children it used to be three-quarters. Parents have had none since 2023.

If one child receives the house, the siblings generally count it when the estate is divided, with no time limit. The value at death counts, not at the transfer.² If the parents exempted the child, the other heirs can demand a reduction where their share is infringed.⁴

The five-year period covers ordinary gifts: those from the last five years before death, and freely revocable ones.⁴ An exempted transfer of assets, or one clearly meant to dodge the compulsory share, stays open with no time limit.⁴ Heirs must sue within a year of finding out, at most ten years after the death.⁴

What this means for you: for a house given to your own child, time alone protects little. State in the contract whether the child must equalise. The compulsory share calculator shows your figure.

A mortgage does not disappear with the transfer. Liability for it stays unchanged unless agreed otherwise.¹⁰ That applies to a gift, an advance on inheritance and a sale below value alike.

If the children take over the debt in the contract, the parents are released from it. The exception: the bank declares to them in writing that it wants to keep them as debtors.¹⁰ This declaration must be made within one year, counted from the land registry's notice. This also applies if the mortgage is secured by a mortgage note (Schuldbrief).¹⁰

This period only affects the relationship with the bank, not the division between siblings. Taking over the parents' house shows how siblings split a mortgage on a takeover.

What this means for you: talk to the bank before you sign at the notary's office. Without a transfer of debt in the contract, the parents remain debtors, even once the house has long belonged to the children.

Two fees apply in almost every case. Notarisation and the land registry entry each cost one per mille of the value, at least CHF 100 each.¹¹ VAT is added only to notarisation.¹¹

Gift tax, by contrast, does not apply to your own children in Zurich. A spouse, partner or descendant is fully exempt, whatever the house is worth.¹² This also covers grandchildren. A step-child, by contrast, is not exempt; inheritance tax in Zurich covers the details.¹²

Property gains tax, the tax on the profit from a sale, is only deferred on a gift or an advance on inheritance, not waived.¹³ Only a later sale by the children triggers it, calculated from the price the parents once paid.¹³ For a sale no more than 25 per cent below value, no mixed gift is presumed. The tax is then normally due straight away.³ Zurich has had no property transfer tax since 2005.¹⁴

What this means for you: the one-off costs are low. The example below shows them for an invented case.

Once registered, the house belongs to the children. If the parents keep a usufruct, they pay ordinary upkeep, mortgage interest and the taxes on the house.¹⁶ Other burdens, such as major renovations, fall on the children.¹⁶ With a sole right of residence, the parents pay ordinary upkeep.¹⁶

Whoever lives in the house pays tax on the imputed rental value (Eigenmietwert), even without owning it.¹⁷ This applies until the end of 2028; from 2029 this tax falls away for self-occupied homes.¹⁸

The parents can only take back a completed gift for serious reasons. These include a serious crime by the child against them, a serious breach of family-law duties, or an unfulfilled condition.¹ The revocation must come within a year of learning of the reason.¹ Needing money later is not a reason on its own.

What this means for you: settle upkeep, conditions and reversion in the contract beforehand. A right of reversion, should the child die before the parents, can be noted in the land register.¹