Selling building land: what is left after property gains tax?

Property gains tax applies only to your gain. The gain is the difference between the proceeds and the acquisition costs, what you paid plus certain later expenses.¹ The tariff rises in steps: 10 per cent on the first CHF 4,000 of gain, then 15, 20, 25, 30 and 35 per cent.¹ Above CHF 100,000 of gain, the rate is 40 per cent.¹ A gain of CHF 100,000 comes to CHF 29,400 of tax, before any adjustment.²

This base tax then adjusts: it rises for short ownership and falls for long ownership.¹ Own the land for under a year, and the tax rises by half; under two years, by a quarter.¹ From five full years it starts to fall; from 20 full years it is halved.¹ No tax applies below CHF 5,000 of gain.¹

What this means for you: in the end, only one figure counts, the amount after every adjustment. The Zurich property gains tax calculator works it out with your own figures.

Acquisition costs are the purchase price plus certain later costs, for example servicing the plot (Erschliessung) or contributions towards the municipality.¹ If you acquired the land more than 20 years ago, you may use the market value from 20 years ago instead.¹ This is an option, not a requirement. You choose whichever is more favourable. In practice, you will usually need a valuation for this.

Have you already paid a value capture levy (Mehrwertausgleich) for this plot? That is the charge on a planning gain from a change of zoning. If so, that amount also counts towards your acquisition costs.¹³ It reduces your taxable gain. You can read when this charge falls due on your plot, and who owes it. The page on the value capture levy in the canton of Zurich explains both.

Important: this 20-year option for acquisition costs is a different thing from the holding-period reduction in the next section. Both involve 20 years, but different parts of the same calculation.

The holding period changes the base tax in both directions.¹ Under one year of ownership, it rises by 50 per cent. Under two years, it rises by 25 per cent.¹ This discourages short-term speculation.

From five full years, the tax starts to fall. It drops by 5 per cent after five full years, then by a further 3 percentage points for every additional full year.¹ From 20 full years, it stops at 50 per cent; there is no further reduction.¹ A plot owned by the family for three decades benefits just as much as one owned for exactly 20 years. Anyone owning land that long has already reached the maximum reduction.

What this means for you: usually what counts is the last change of ownership, the moment you became the owner.¹ After an inheritance, an earlier date often applies instead.¹ Have your own exact date confirmed by the notary’s office or the municipal tax office. Ask them to confirm your reduction too, before you fix a price.

If you inherit building land, the inheritance itself does not yet trigger property gains tax.¹ The same applies to an early inheritance advance (Erbvorbezug, an advance on your inheritance during someone’s lifetime) and to a gift.¹ The tax is only deferred, not waived: it falls due once you, or the community of heirs, actually sell.

For the holding period, what usually counts is not your date of inheritance, but the earlier acquisition by the person you inherited from.¹ That can make your reduction noticeably larger. The gain is calculated from that original purchase price, not the value at inheritance. If that acquisition was over 20 years ago, you may use the market value from 20 years ago instead (§ 220(2)).¹ If they bought the land decades ago, you take over that long holding period in full.

If there are several of you inheriting, you usually sell the land together. How the gain and the tax are shared among everyone involved is explained on the page on joint heirs and land.

In a land consolidation (Landumlegung), several owners exchange or reorganise their plots.¹ This happens, for example, as part of a neighbourhood development plan (Quartierplan) or a boundary adjustment. It allows sensible building to go ahead. This exchange itself does not yet trigger property gains tax either; here too, it is only deferred.¹

This mainly affects owners whose land is redrawn together with neighbouring plots to make it ready for building. Even the size of your plot can change this way, without an ordinary sale taking place. More on subdividing a plot itself and the permits this needs is on the page subdividing a plot in the canton of Zurich.

What this means for you: the tax only falls due at the next actual sale. Even so, have the exact process confirmed early by the municipal tax office, so nothing comes as a surprise later.