6 - You Can Afford It. That Doesn’t Mean You Can Buy It - Buying Property in Switzerland with Peter Bloemsma

00:00:01: Since Mr Trump is in politics, he has shut the world.

00:00:05: Yeah and good properties they flip within two days.

00:00:08: Is there one clever moment or tip that you have for people?

00:00:17: Couldn't help but wonder if taxes are truly unavoidable Why do they always feel like a bad date we never agreed to?

00:00:26: Welcome To Tax And The City.

00:00:28: I'm Julia Tadje from Taxom Your Personal Tax Boutique In Zurich.

00:00:33: Here we talk taxes simply and honestly.

00:00:36: Sometimes just you & me, sometimes with guests always rooted in real life And just like that something mandatory becomes a little more delightful.

00:00:50: I couldn't help but wonder why the moment people fall in love with Switzerland is often the moment they are told no The mountains are perfect infrastructure works... ...the idea of having a place here feels grounding to a lot of them.

00:01:04: And then comes the sentence no one expects, you're actually not allowed to buy that.

00:01:08: At Tuckson we see things like this again and again successful international clients who assume buying property is a question of budget only when in Switzerland it's often a question for permission lex collar quotas residency status usage restrictions building stop-for holiday houses.

00:01:28: suddenly dream turns into a puzzle which why todays conversation so timely?

00:01:34: My guest Peter Blömsma, managing partner of Swiss Advisory Services works exactly at this intersection where international expectations meet Swiss reality.

00:01:45: Peter I'm really happy you're here.

00:01:46: welcome to Tax in the City.

00:01:48: Thanks for having

00:01:48: me!

00:01:48: Peter people often assume um This is a tax conversation but very often it's not so much earlier.

00:01:56: How did you end up working with internationals who want to buy property in Switzerland?

00:02:02: Good question We have a place in the mountains ourselves and A friend of mine who is not living in Switzerland asked me if I could assist him Of finding and buying similar property.

00:02:14: And then i found out really for us, you know like it's complex and challenging process Yeah.

00:02:20: I live in Switzerland and our work in Switzerland.

00:02:22: He lives outside Switzerland.

00:02:24: So for you?

00:02:25: It wasn't complicated buying something in the mountain.

00:02:27: yeah

00:02:28: because it is restricted for foreigners to buy.

00:02:31: yes For foreigners that don't live in Switzerland to be precise.

00:02:34: Yeah,

00:02:35: they don't have a prime residence here.

00:02:37: Yes

00:02:38: So it could be Swiss or foreigner with the B word seek permit.

00:02:42: most of those people They are not only looking for an investment but four along term planning.

00:02:48: yes.

00:02:49: And then I thought hey this could be a niche and that's why i found at swiss advisory services We base system clients Most nationals With the acquisition of their property in Switzerland.

00:03:05: And

00:03:07: when did you realise that the biggest surprise isn't the price, which can be quite surprising as well but it's more the rules in Switzerland?

00:03:17: Well, pricing can be managed.

00:03:19: It is all about setting expectations and probably have the same in your business.

00:03:25: But especially for foreigners, it is restricted.

00:03:28: When people Google they will probably see the next color.

00:03:31: so affordability doesn't mean I get a permission because Switzerland is really protecting its land and then also since in two thousand twelve we had building store all down.

00:03:43: So not only four foreigners but also for The prime residence that has huge impact

00:03:51: on the market.

00:03:52: On supply yes as always.

00:03:56: so those are basically yeah it's not only price.

00:04:00: no, yes.

00:04:00: It is not only the price.

00:04:01: um low let us assume your client is not worried about the price.

00:04:05: then there still might be a short supply and that is those famous lex collar things.

00:04:13: maybe you can say something about lex color just shortly for those of us who aren't familiar with this term.

00:04:19: in summary lex colour is basically restricting The acquisition of land and property by foreigners in Switzerland.

00:04:27: There were fifteen hundred permits to give away.

00:04:30: In the whole Switzerland?

00:04:31: In all Switzerland, the tele starts first January on zero.

00:04:35: Fifteen hundred pairs.

00:04:36: A foreigner when he buys privately residential can only buy one.

00:04:43: okay it can only be maximum two hundred square meters net It can Only Buy a thousand square meter land

00:04:52: Okay

00:04:54: And he cannot resell within five years.

00:04:57: So that is those are the restrictions and That isn't big surprise to a lot of people

00:05:04: because I can imagine

00:05:05: because which one's it very open?

00:05:07: Yeah, they think well when this opened we can buy whatever We want.

00:05:12: no you cannot

00:05:13: okay.

00:05:14: so there is the biggest surprise an that Is always when i do the intake too really explain them Because some clients.

00:05:22: But we have the money?

00:05:23: Yeah,

00:05:24: but you cannot buy it.

00:05:26: yeah so many can't can't buy everything.

00:05:28: um like We met through a partner that is advising us individuals I remember uh Finally someone who explains Switzerland without sugarcoating It because this what lot of people do?

00:05:44: Switzerland has his image or Like its all cute and pretty picture perfect.

00:05:51: Which is this?

00:05:52: I think you mentioned that already.

00:05:56: You need to do a lot of expectation management, so it's not like... ...I have millions available and want his house.

00:06:02: It takes a

00:06:03: little bit more.

00:06:05: So sometimes i have clients who know what my wishlist would be Fish-Tenek Chalet, Skiing Ski Out, Seven Bedrooms, Carriage for Five

00:06:13: Guys,

00:06:14: The Lot.

00:06:15: And then they say okay first of all.. ..it isn't on the market.

00:06:20: And second of all,

00:06:21: even if

00:06:22: you cannot buy it and people are surprised because typically those type of clients they have multiple assets.

00:06:32: They can buy in their own countries or whatever they want?

00:06:35: Yeah!

00:06:35: That is sometimes a shock... Are there not any exceptions?

00:06:39: No!

00:06:41: In that perspective these are very strict.

00:06:45: Okay.

00:06:47: Expectation gap sometimes also happens in the field of taxes.

00:06:52: But on the other hand, if you know the rules... So for instance I had a client who wanted to have a penthouse but it was not on the market and i knew about new development.

00:07:04: they were selling units so why don't we contact them?

00:07:10: And acquire two units?

00:07:13: We will combine that as long as it is registered as one because you can only buy.

00:07:22: And if we work together with the developer and we stay under two hundred square meters net, then it will also fulfill that request.

00:07:33: So

00:07:33: at the end he bought it and probably has three hundred twenty gross.

00:07:39: There is a big thing what's net?

00:07:40: What is gross but officially state under two-hundred net.

00:07:44: okay

00:07:45: now here's.

00:07:47: He thought he could not buy it.

00:07:49: So if you know the regulation, but this was like twelve years ago so a lot has changed because of these buildings.

00:07:55: It's the same with taxing.

00:07:57: If You Know The Rules

00:07:58: Yeah!

00:07:58: It helps And

00:07:59: you navigate... ...the right way then.. ..you can add value to your client.

00:08:05: Yes That is absolutely true.

00:08:07: So Alex Koller we already touched that bit.

00:08:10: Why does Switzerland have this law?

00:08:13: Don't We Like People Buying expensive holiday homes, or why did Switzerland put this in place?

00:08:20: They are very restricted.

00:08:22: they want to protect their land and their DNA.

00:08:26: so if you go through a typical ski resort now we're talking about ski resorts of the mountain snow You don't see high rise buildings.

00:08:35: that will probably be seen in France.

00:08:39: We dont'want to have ghost towns because can you imagine... If they do that?

00:08:43: maybe sixty thousand people during Christmas And then the second week of January,

00:08:48: there's going to be no one.

00:08:49: There is no one doing Christmas.

00:08:51: you need off all the festivities or the supermarkets over all the grocery like the rest.

00:08:57: just To make it very clear if one of our listeners Is living in Switzerland they are not affected by this lexicolor thing.

00:09:05: They have their primary residence here

00:09:08: and considered a Swiss

00:09:11: even If they aren't having a swiss passport.

00:09:14: but they can buy a holiday home in the mountains.

00:09:18: But as I said, In two thousand and twelve.

00:09:21: there is building stuff

00:09:22: for all

00:09:23: of their houses.

00:09:24: so also for the Swiss.

00:09:25: And if you ask what has happened over the last couple years A lot Global warming is effect.

00:09:36: So i was skiing during Christmas.

00:09:38: We see a lot of buses driving up with day people.

00:09:44: Typically you want all the ski resorts.

00:09:46: They are lower, so where do they go?

00:09:48: Where does snow is?

00:09:49: yeah

00:09:51: That has a huge impact on the prices.

00:09:53: The other of these things also this Swiss ski resort don't want to be totally dependent on that winter season.

00:10:00: So there's

00:10:02: mountain biking

00:10:04: hiking horse riding golf tennis at all

00:10:08: swimming.

00:10:09: Yeah

00:10:14: There are often multi-season activities.

00:10:17: That requires huge investments, so that has changed.

00:10:21: Covid has changed a lot for the world but specifically for Switzerland.

00:10:27: the Swiss typically go on summer holidays not in Switzerland.

00:10:32: they could not travel.

00:10:33: what

00:10:34: did they do?

00:10:36: They discovered it's actually very beautiful during Summer here as well.

00:10:40: Yeah exactly!

00:10:41: So the stock Went down.

00:10:44: Yeah,

00:10:45: and now we are.

00:10:45: you know if three years down the road now Rarely see those properties hitting the market again.

00:10:52: Yeah COVID also The Swiss embraced our working.

00:10:58: So if you buy all of them as she were looking for a study yeah so there requirements For the whole house not only from this place but in general people tend to say okay If I go that want to work?

00:11:10: Yep infrastructure, maybe co-working spaces.

00:11:19: The e-mobility.

00:11:20: so if you drive into Switzerland and have an e-car... So the requirements from people has changed a lot.

00:11:29: A thing that really has changed over the last three years has to do with global instability.

00:11:36: Economically and democratically

00:11:39: And politically.

00:11:41: What

00:11:41: we see is People are looking for Plan B. What if the shit hits the fan?

00:11:47: Okay, then they could see that Switzerland

00:11:53: is perceived by a lot of those people.

00:11:55: it's a safe haven and I must say the last couple since Mr Trump isn't sick he has shocked world.

00:12:05: yeah And we see this.

00:12:07: so there was a lot Of insurance in people buying.

00:12:13: OK,

00:12:14: it's like listening to you.

00:12:15: It seems like there is more and more people looking for holiday houses but not that they are being put on the market because of a building stop.

00:12:24: Is there one clever moment or tip?

00:12:29: So when would be if ever good moments to look at?

00:12:33: buy something potentially in December?

00:12:36: Well I was advised If your'e looking for holidays for snow activities.

00:12:42: So when go people, go there just before Christmas till Easter.

00:12:47: And a lot of those people are the emotional bias.

00:12:52: so we need to check out at our hotel for two weeks.

00:12:55: they will do the calculation.

00:12:56: what can I afford putting this money in the mortgage?

00:13:02: So don't buy them.

00:13:03: my advice would be wait until snow has disappeared.

00:13:08: let's say look again.

00:13:11: Another thing.

00:13:12: what you see is because of that building stuff, there's a new solution in the market which is buy-to-let.

00:13:20: So if I something but there isn't an obligation to have to rent it out?

00:13:25: Yes!

00:13:27: To a

00:13:27: permanent resident?

00:13:28: No!

00:13:31: You can use this for four or six weeks and then the rest of your season has to be rented out

00:13:36: to

00:13:37: someone else.

00:13:39: And for some people, this is quite interesting because they only have five weeks all day.

00:13:44: So in a good scenario the rental income will pay the fixed cost and then you still have your preferred location.

00:13:53: let's say it's Ian's.

00:13:54: Yeah yeah uh...and you don't get any worries.

00:13:57: so that was um ...a good alternative if you cannot find your perfect holiday decision

00:14:05: okay?

00:14:06: There might be solutions!

00:14:11: Okay, okay.

00:14:13: Are there stories that you've seen people wanting to buy something?

00:14:20: People actually then buying some thing?

00:14:23: is there any stories You can share with us apart from those that you already told this or like popular misconceptions Apart form?

00:14:33: I have the money.

00:14:33: i could simply just point on something.

00:14:35: and yeah

00:14:38: As I said, it's all about setting expectations.

00:14:41: You need to be lucky.

00:14:42: so what I typically do if i have someone real estate agents the selling agent they want to work with Agents that are assisting the buyer.

00:14:53: Yes Often Purchase doesn't go through because the client is not prepared.

00:14:59: So first of all you have The regulations and permits but also If we need a mortgage which takes time And the mortgage It's a bit different than probably other countries because you need to bring quite a bit of own assets.

00:15:16: Yes,

00:15:17: and the bank is not calculation.

00:15:19: lets say one point three percent.

00:15:21: they're calculating with five percent.

00:15:23: So there was that the bank Plies

00:15:27: yeah

00:15:27: And then they can calculate okay?

00:15:29: What is my

00:15:30: ability?

00:15:31: yes They do this famous feasibility test.

00:15:33: Yeah so often

00:15:35: clients, even if they have them.

00:15:37: They miss out because there are too late?

00:15:39: Yeah!

00:15:40: So my advice would be do your homework first with or without a buying agent.

00:15:46: it will be perfect in my role If I can find property that is off-market.

00:15:54: yeah.

00:15:54: so My role is to build up huge network and switch with those selling agents like hey if you had something...if he did an intake call me i'd help

00:16:03: the client

00:16:06: And that takes time.

00:16:07: I've been doing this now since it's two thousand nine, i know a lot and live in Europe.

00:16:11: most of the ski areas within two hours are now all day and I speak German but we also have a French speaking part.

00:16:18: But...I have built huge networks which is why as we serve us We're a network of service providers.

00:16:25: Yes Like tax

00:16:26: consultants Because if you own a place In Switzerland You need to pick

00:16:29: tax.

00:16:30: Actually Also If you don't Live here.

00:16:33: Yeah property like a house or flat, a penthouse.

00:16:37: A chalet whatever it is taxable in Switzerland because It's an immobile asset.

00:16:43: So even if the client lives In the Netherlands China Or wherever Switzerland will ask this person to complete a tax return.

00:16:52: And surprising people Is that in the tax return they would also have To declare their worldwide income and assets.

00:17:02: That has nothing to do with the property.

00:17:05: So this is often a surprise for people?

00:17:09: This is a surprise and if I look to my clients they typically say, I don't know!

00:17:14: And If i want to figure it out... It takes me

00:17:17: days yes

00:17:19: but correct me if I'm wrong.

00:17:21: The Swiss are also saying okay But then we will calculate the highest rate.

00:17:25: Yes

00:17:26: so you do not have two Exactly ...so if you dont'want to invest your time or effort.

00:17:32: But again, compared to other countries I'm Dutch and having a holiday house in Holland it's way more taxed than for instance in Switzerland.

00:17:41: Yes

00:17:42: yeah that.

00:17:43: the other thing is also as you know... The mortgage costs the renovation cost the maintenance costs are still deductible.

00:17:54: yes

00:17:54: so most of my clients they talk people like your And even if they have the assets, what would be my most tax efficient mortgage?

00:18:06: Yes.

00:18:06: So Even If you are willing to accept the highest tax rate because it's just can't be both that or Because your life is too complicated outside of Switzerland To actually make a proper declaration Then we could still find ways to bring down The taxable income and assets in Switzerland as much As possible.

00:18:27: I honestly have never seen someone that says no, i'm not buying a holiday home because of the taxes.

00:18:33: Because this is not...

00:18:35: No but the clients has to understand it's six different contents.

00:18:40: Twenty-six different tax laws?

00:18:41: Exactly

00:18:42: yeah.

00:18:42: so when people ask me about tax they always say ''I will put you forward'' or ''I'll introduce you''.

00:18:48: To the local experts

00:18:50: yes there's

00:18:50: some one in Alice which is the French speaking bit.

00:18:53: Yes They don't probably know.

00:18:58: Yes, so it's very different from Canton to Canton.

00:19:04: It is a very special area in many regards.

00:19:07: when it comes to taxes related to holiday home this is not a massive issue.

00:19:12: its' just highly advised.

00:19:17: take care of it and have someone that assists you with neglected or don't do anything about

00:19:29: it?

00:19:30: Well, the thing while we're talking about tax I also have clients that are considering moving to Switzerland for a longer term and then you could apply for the Lomsson Taxation.

00:19:43: For lot of nationalities they can be very interested.

00:19:47: so on Dutch for instance if you live over ten years Well, in Holland for instance you pay a lot of tax.

00:19:55: And I think that also applies to four other countries.

00:19:58: so again if You are considering Plan B and you live in the country where it is easier To move your papers let's say to Switzerland yeah then there could be definitely be an issue.

00:20:14: Yeah If you do that you have more choice because you're not considered as a foreigner.

00:20:18: Yes Then you can buy the second holiday home or one with five swimming pools if you manage to find it.

00:20:25: Let us know, we will be very interested where you've learned it!

00:20:28: Do you think that this has changed over last month?

00:20:34: You mentioned Mr Trump and global situation.

00:20:37: are people willing to accept properties they don't perfectly fit their requirements?

00:20:43: just have something?

00:20:45: Yeah... They do

00:20:48: Because of this plan B thing,

00:20:50: huh?

00:20:50: Yeah.

00:20:50: So I had a couple inquiries about people you know like... ...I want to find something in four months.

00:20:56: Find it!

00:20:57: Whatever it is basically.

00:20:59: Yeah and that's a bit scary.

00:21:03: It's an interesting world we live in.

00:21:06: And also if you look at the last ten years If you look into price increases All factors are just mentioned.

00:21:15: Yes

00:21:15: But when they're middle-of-a-year Europe when I came to Switzerland in two thousand and three the euro was one sixty seven To the Frank.

00:21:26: now it's ninety-three cents.

00:21:28: Yes,

00:21:28: so Those countries around slender are considering buying all day house inch which they come with euros.

00:21:36: So we did.

00:21:37: It is very expensive.

00:21:39: there still more demand than supply.

00:21:41: that drives the price up not only from the foreigners but also from this way.

00:21:45: You mentioned global warming and like resorts that are up higher becoming more popular.

00:21:53: Do you see a different price development in lower resorts?

00:21:59: Can can actually tell from the price perspective?

00:22:02: Yeah,

00:22:03: so prices are still going up but the price increases In all of the resorts high at fifteen hundred meters they go much faster.

00:22:14: So if you look at the stats for instance, Switzerland has relatively high altitude ski resorts.

00:22:23: Their price increases compared to the rest in Europe and European Alps have been increasing more than let's say.

00:22:32: And yeah it is a fact global warming... It's

00:22:37: a shame yes

00:22:38: but its reality.

00:22:42: I don't want good news.

00:22:46: We're talking about global warming, but it could be something if you definitely want to have a property in Switzerland and the plan being looking for something in a resort that is below one thousand five hundred.

00:22:58: Could be um A good option?

00:23:01: That could be a good option.

00:23:04: uh If you are not keen on wind sports or for instance... ...if you are okay when you drive twenty minutes to a higher up ski resort?

00:23:11: Yes Yeah For sure.

00:23:14: I know that people who live here and have their permanent residence, they have difficulties in finding something.

00:23:23: In the Alps you can only imagine how difficult it must be if you are not in a country yourself.

00:23:29: You live elsewhere.

00:23:33: so this is what you do for your clients.

00:23:37: The good properties fit within two days.

00:23:43: They don't.

00:23:43: they are not published.

00:23:45: And that's where we come in as agents, We have a huge networks.

00:23:49: agent tends to work together because... ...we've done our own work with clients and we can move fast.. ..and if I bring a client.

00:23:57: maybe in the future i will have a property That i want to sell.

00:24:00: then i'll go into my colleagues.

00:24:02: Yes

00:24:03: So we all help each other.

00:24:06: The thing of course If you look at real estate market also has changed Because ten years ago there were a lot of new developments that they can sell but now, there is less to sell.

00:24:20: Do you see any end-to this building stop?

00:24:23: Are there any discussions going on ?

00:24:25: Well ,there's a building spot But what is newly built most of it Is ore by Toulette.

00:24:32: So basically all the houses with rental obligations.

00:24:38: But also for primary resources because There was huge challenge.

00:24:42: in most tourist destinations, during peak you have to serve your clients.

00:24:51: But the local people they had...

00:24:54: They have to live somewhere?

00:24:55: You

00:24:55: have to provide their service and it has to live some way.

00:24:58: so if we go into the mountains nowadays and seeing new developments typically its for primary residences.

00:25:05: Okay.

00:25:06: And are these private residences priced very differently?

00:25:11: Yes I would say, especially also for foreigners.

00:25:14: there is typically a premium to be paid.

00:25:18: Okay

00:25:19: because the sellers they know when you have something and your under that two hundred square meters yeah note if he will open it in new market.

00:25:31: yes

00:25:33: the foreigners And

00:25:36: they are keen Story that is being told and told, you can find a trick.

00:25:42: You have to set up company in Switzerland... ...and then buy holiday home.

00:25:47: Can you dim this by that?

00:25:49: Well

00:25:51: there's a resort which is Andermatt Which has huge resorts at the centre of Switzerland.

00:26:00: When they started it was negotiated This is Lexkola Exempted.

00:26:06: So you can buy as big, because you want.

00:26:08: As many as you want there.

00:26:10: You could also by with the company.

00:26:12: Yes, you can.

00:26:13: Can you buy it?

00:26:14: With a company yes but It is typically not residential.

00:26:22: Okay

00:26:22: and then you have totally different Requirements.

00:26:27: so the legs color looking private.

00:26:30: Yeah

00:26:31: that's like yeah they don't look at company.

00:26:34: if this company to say no

00:26:36: Okay, because I think it is a common misconception.

00:26:41: I hear this again and again.

00:26:43: It's very complicated?

00:26:44: Yes

00:26:46: Definitely there are cases.

00:26:48: There were also cases.

00:26:49: So i heard the case on the other day Someone not living in Switzerland.

00:26:54: He had all of their house And he extended it and then he wanted to sell it.

00:27:00: Yeah

00:27:01: Then the notary said This was the origin which is under two hundred meters.

00:27:06: If I do the inspection now, there's three on it.

00:27:09: So he didn't have a permit?

00:27:11: He just failed.

00:27:13: so they said if you want to sell it restore in the original state that you bought it.

00:27:19: Wow okay!

00:27:20: The Swiss can be very picky

00:27:22: and they can be like this is the law This is the Law

00:27:27: And then its very clear

00:27:29: these

00:27:31: are rules.

00:27:32: follow them, you live by then.

00:27:34: It's great!

00:27:35: Yeah if there is one takeaway for me today that wanting something badly doesn't automatically make it possible but understanding the rules gives back control.

00:27:51: here at Huxham we always say good decisions start with honest conversations.

00:27:55: ideally before people fall in love with a property they may never be allowed to own.

00:28:01: You'll find all relevant details about Peters, with advisory services and our services at Taksum in some nodes as usually.

00:28:11: And just like that you've been listening to another episode of Tax and the City.

00:28:15: thanks Peter!

00:28:16: Thanks for having me.