Sell your house and rent it back: how secure is your home?

Yes, and faster than most people think. In a rent-back, you sell the house and sign a lease with the buyer. From day one, the buyer is your landlord. If the lease is open-ended, with no fixed end date, the buyer may terminate it in the ordinary way.¹ The notice period is three months to a customary local date.¹ No reason such as personal need is required.

You are not without protection, though. Notice is only valid in writing and on the official cantonal form.¹ If it breaches good faith, you can challenge it.¹ If moving out would cause you hardship, you can ask for an extension. For homes, that is at most four years.¹ The circumstances in which the lease was signed also count.¹ For both, you have 30 days from receiving the notice, at the conciliation authority.¹

What this means for you: an open-ended lease on its own gives you no right to stay. It gives you a notice period and the right to have the notice reviewed.

Security comes from the contract, not from trust. There are two levers. The first is a fixed term or a written waiver of notice by the buyer. A fixed-term lease ends by itself on the agreed date, without notice.¹ You must then ask for an extension no later than 60 days before it expires.¹

The second lever is an annotation (Vormerkung) in the land register, the official register of property. It must be agreed expressly.¹ Then every later owner must let you live there under the lease.¹ Without it, the lease passes to the next buyer on a resale. But in case of urgent personal need, that buyer may give notice with the statutory period.^{1 10} The first buyer is then liable to you for the damage.¹ The home is gone all the same.

What this means for you: a fixed term or a waiver of notice, plus the annotation. Only the two together protect you. An annotation on a lease that can be ended at any time helps little.

In a sale with a right of residence (Wohnrecht), you sell the house and keep the right to live in it. The right is entered in the land register and notarised.² It cannot be transferred or inherited.² If you move out, you may not let the house. Only a usufruct (Nutzniessung) allows that.² The guide to both explains the difference.

For inheritance and gift tax, Zurich converts a usufruct into francs using an official table.³ The interest rate is 3%.³ For a woman aged 70, the factor is 15.13; for a man aged 70, it is 13.82.³ This is a tax value. The directive does not name the right of residence; the tax office confirms if it applies.

What a buyer pays is another question. No official figure exists for that market discount. Anyone quoting you a fixed percentage is estimating.

What this means for you: the younger the holder, the higher the factor and tax value. The market price needs a review.

With a life annuity (Leibrente), you receive regular payments instead of the full price. Unless agreed otherwise, they run for life.¹ It can be combined with a right of residence. The annuity contract on its own only needs to be in writing.¹ That makes it lighter in form than a property sale, which must be notarised.^{1 2} But if the house is transferred in return for the annuity, the whole deal is a property sale. Then the whole contract needs notarising.^{1 2}

A maintenance contract (Verpfründung) is stricter. There, the buyer owes not just money but upkeep and care for life.¹ It needs the form of a contract of inheritance, meaning notarisation before two witnesses.^{1 2} For your claims, you are entitled to a statutory lien on the transferred house, like a seller.¹

What this means for you: with an annuity, you carry the risk that the buyer stops paying. How the annuity is secured therefore belongs in the contract.

For tax, that is usually no problem in Zurich. Descendants are exempt from inheritance and gift tax.⁴ The risk lies elsewhere: with supplementary benefits (Ergänzungsleistungen), should a care home become necessary. Supplementary benefits top up the old-age pension when pension and assets are not enough.

If you receive less than 90% of the market value (Verkehrswert), it counts as a waiver of assets.⁶ The difference is counted as if you still had the money.⁵ It only falls by CHF 10,000 a year.⁶ A sale at market value, on the other hand, is not a waiver.^{5 6}

Whether a reserved right of residence counts as part of the price is set out in federal guidelines. How they apply to you is confirmed by the supplementary benefits office of your municipality. Clarify this before signing.

What this means for you: a fair price protects the parents if they need care. A family discount can become expensive years later. More under care and later life.

On the sale, property gains tax (Grundstückgewinnsteuer) is due, the tax on the profit from the sale.⁷ It falls with length of ownership. Deferral for a replacement home requires you to put the proceeds into a new home you live in yourself.⁷ Renting back the house you sold does not qualify, so the tax falls due.

After that, it depends on the option. Anyone living there under a free right of residence or usufruct pays tax on the imputed rental value (Eigenmietwert).⁸ That is the notional rent of your own home. It will be abolished on 1 January 2029.⁹ Anyone renting pays rent and no imputed rental value.⁸

How a reserved right of residence counts for property gains tax is confirmed by the municipal tax office. The law counts every further benefit from the buyer as part of the proceeds.⁷ So ask before the contract.

What this means for you: work out the property gains tax before choosing a model. The calculator for the Canton of Zurich shows your figure.