Change in practice: Taxation of right of residence Lucerne
This change affects the grantor and the holder of the right of residence if the right of residence is granted in return for periodic payments. This may now already be the case if the holder of the right of residence bears the mortgage interest in addition to the property maintenance costs. In addition, it has been specified how the values are to be declared in this context.
What is a right of residence?
A right of residence grants the beneficiary the right to live in a building or part of it. This can be free of charge or for a fee and can be granted for a limited period of time or for life. In the case of a right of residence, a distinction is made between the holder of the right of residence (WN) and the grantor of the right of residence (WG). A common application is the transfer of a property from the parents (=WN) to the children (=WG) with the simultaneous granting of a lifelong right of residence for the parents. However, it should be noted that the right of residence is neither transferable nor inheritable and can only be exercised by the WN. However, unless expressly excluded, family members or other roommates may also be admitted.
The changes in concrete terms
For tax purposes, the decisive factor is whether or not the right of residence is granted in return for periodic payments.
There is no change in the situation without periodic payments. In this case, the WN must generally pay tax on the rental value. The type of grant is irrelevant (e.g. for a limited period or for life, for a one-off payment or free of charge). If, for example, the purchase price of a property is paid in full or in part by granting a right of residence, or if the right of residence is acquired by means of a one-off payment, there is no periodic benefit. This approach will continue to apply unchanged from the 2024 tax period.
If, on the other hand, there is a situation with periodic payments, from the 2024 tax period onwards, the landlord must now pay tax on these payments, but at least 70 % of the imputed rental value. Previously, if the periodic benefits did not cover the taxable rental value (at least 70% of the imputed rental value), this difference was or will be allocated to the WN for taxation up to and including the 2023 tax period.
It has now been determined that the assumption of property maintenance costs and debt interest (cumulative) by the WN qualifies as a periodic benefit. In contrast, ancillary services such as incidental costs remain irrelevant for tax purposes and do not qualify as periodic services.
Furthermore, a clarification was made with regard to property maintenance costs. The flat-rate deduction can only be claimed by the WG. In contrast, the actual deduction can in principle be claimed by both the WG and the WN, provided they can provide proof of payment for the costs actually incurred.
The author and our specialist legal team will be happy to answer any tax-related questions you may have about or the creation of a right of abode.
