Tax glossary
Property gains tax
Property gains tax is a special tax on the profit from selling real estate; in the Canton of Zurich it is levied by the municipality and falls the longer you have owned the property.
If you sell Swiss real estate at a profit, you don't pay ordinary income tax on it but a separate property gains tax (Grundstückgewinnsteuer). It is assessed independently of your other income, with its own rate schedule and procedure. In the Canton of Zurich it is purely a municipal tax: it is assessed and collected by the municipality where the property is located — for a flat in Winterthur, by the City of Winterthur.
Zurich follows what is known as the monistic system. This means that gains on property held as business assets are also subject to property gains tax, as far as the pure increase in value is concerned. There is no federal tax on private property gains.
The taxable amount is the gain: the sale price minus the investment costs. These include the original purchase price, value-enhancing investments and costs linked to buying and selling, such as estate agent commission or advertising. The rates are progressive, reduced for long holding periods and increased for very short ones. Gains below CHF 5,000 are not taxed.
The Zurich rate schedule
The rates are set out in § 225 of the Zurich Tax Act and are the same in every municipality — there is no multiplier. The gain is taxed in bands:
- 10% on the first CHF 4,000
- 15% on the next CHF 6,000
- 20% on the next CHF 8,000
- 25% on the next CHF 12,000
- 30% on the next CHF 20,000
- 35% on the next CHF 50,000
- 40% on the part of the gain above CHF 100,000
Holding period: surcharge and reduction
Sell quickly and you pay more: if you have owned the property for less than one year, the tax rises by 50%; for less than two years, by 25%. From five full years onwards the tax falls — by 5% after five years and then by a further 3 percentage points per year, up to a maximum reduction of 50% after 20 full years.
For long-held properties there is a further relief: if the purchase was more than 20 years ago, you may use the market value 20 years ago instead of the actual investment costs. This helps especially with inherited houses bought at a very low historical price.
- Less than 1 year: 50% surcharge
- Less than 2 years: 25% surcharge
- 5 full years: 5% reduction
- 10 full years: 20% reduction
- 20 full years or more: 50% reduction
Deferral instead of tax
In certain cases the tax is not charged but deferred: on inheritance, advance inheritance and gifts, on transfers between spouses and — especially relevant — when you replace a home you have lived in permanently and exclusively with another owner-occupied home in Switzerland. If you sell your house in Winterthur and buy a new home to live in within a reasonable period, the gain can be deferred to the extent it is reinvested.
Deferral is not exemption: the deferred tax becomes due when you later sell the replacement property, with the holding period of the first property counting towards it.
Example: Selling a flat in Winterthur
A married couple bought a flat in Winterthur-Seen in April 2013 for CHF 620,000 and sold it in June 2025 for CHF 830,000. In the meantime they added a conservatory and extended the kitchen, with a value-enhancing share of CHF 38,000. The estate agent's commission on the sale cost CHF 22,000. Their investment costs are therefore CHF 680,000 and the gain CHF 150,000.
Under the rate schedule, the first CHF 100,000 gives a tax of CHF 29,400 and the remaining CHF 50,000 at 40% gives CHF 20,000 — CHF 49,400 in total. After twelve full years of ownership the tax is reduced by 26%, to about CHF 36,556. Had the couple lost the invoices for the conservatory, the gain would have been CHF 38,000 higher and the tax more than CHF 11,000 higher.
Frequently asked questions: Property gains tax
Which costs can I deduct from the gain?
The purchase price, all value-enhancing investments, estate agent commission, advertising and other costs of buying and selling. Ordinary maintenance costs you have already deducted for income tax are not deductible again.
Do I need to report the sale on my tax return?
Yes, the sale and proceeds belong on your regular tax return because your assets and debts change. The property gains tax itself, however, is assessed separately by the municipality.
What if the seller doesn't pay?
The municipality has a statutory lien on the property for the property gains tax. That's why the sale contract usually provides for part of the price to be paid directly to the municipality as security.
What about a loss?
A loss triggers no property gains tax. It cannot, however, be offset against your other income or your income tax.
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