{"id":10820,"date":"2022-11-03T11:10:07","date_gmt":"2022-11-03T11:10:07","guid":{"rendered":"https:\/\/chettioan.com\/?p=10820"},"modified":"2023-01-26T06:59:15","modified_gmt":"2023-01-26T06:59:15","slug":"debt-interest-is-tax-deductible-in-switzerland","status":"publish","type":"post","link":"https:\/\/chettioan.com\/debt-interest-is-tax-deductible-in-switzerland-10820.html","title":{"rendered":"Debt interest is tax deductible in switzerland"},"content":{"rendered":"<p><span itemprop=\"image\" itemscope itemtype=\"https:\/\/schema.org\/ImageObject\"><img itemprop=\"url image\" loading=\"lazy\" src=\"https:\/\/chettioan.com\/wp-content\/uploads\/sites\/464\/2023\/01\/schuldzinsen-der-schweiz-55d9bb2.jpg\" alt=\"Debt interest is tax deductible\" width=\"730\" height=\"410\" \/><meta itemprop=\"width\" content=\"730\"><meta itemprop=\"height\" content=\"410\"><\/span><\/p>\n<p>Loans are popular in Switzerland. Every third person has or has already had a loan. Many borrowers do not know that debt interest from personal loans is deductible and reduces their tax burden. Their deductibility is particularly generous and conceivably simple. But not every interest to be paid falls under it. Learn how you can reduce your tax burden and what the limits are.<\/p>\n<h2>What is debt interest?<\/h2>\n<p>A sports car, the long-desired oversized TV or the high back tax payment &#8211; there are many reasons to take out a loan. In addition to the low interest rate, the tax deduction of debt interest supports the borrower. Recognized in the Tax Relief Ordinance 642.11 are interest on secured and unsecured loans (mortgages and personal loans, small loans, etc.).). This also includes debt interest from credit card transactions or private loan agreements, for example between family members or friends.<\/p>\n<p>Tip: The deductible interest does not necessarily correspond to your loan installments. In addition to the interest portion, these usually also include a repayment portion. The following applies: only interest is tax deductible. Since their share becomes smaller and smaller as repayments continue, the debt interest deduction is reduced over the term of the loan.<\/p>\n<p><span itemprop=\"image\" itemscope itemtype=\"https:\/\/schema.org\/ImageObject\"><img itemprop=\"url image\" loading=\"lazy\" src=\"https:\/\/chettioan.com\/wp-content\/uploads\/sites\/464\/2023\/01\/schuldzinsen-der-schweiz-734996.png\" alt=\"Ylex\" width=\"750\" height=\"250\" \/><meta itemprop=\"width\" content=\"750\"><meta itemprop=\"height\" content=\"250\"><\/span><\/p>\n<p>The decisive factor is not who pays the interest, but only who is the debtor.<\/p>\n<h2>Is the tax deduction worthwhile?<\/h2>\n<p>What many borrowers do not know:<\/p>\n<ul>\n<li>Debt interest is not only tax-deductible for homeowners, but also for private borrowers<\/li>\n<li>These are deductible both for direct federal tax and for cantonal income tax<\/li>\n<li>Interest on loans is deductible up to the amount of the gross income from private assets plus an allowance of CHF 50,000<\/li>\n<\/ul>\n<p>This is worthwhile: for example, you take out a personal loan of CHF 20,000 with a term of 3 years. In the first year, an interest expense of approx. CHF 1,500 incurred. With the average tax rate of 29% of a natural person in Switzerland, a tax saving of CHF 435 would be achievable.<\/p>\n<h2>Which debt interest is recognized by the tax authorities?<\/h2>\n<p>Not every interest claim is tax deductible. You can see which debt interest the cantonal tax authorities recognize as deductible here:<\/p>\n<h3>Current account interest<\/h3>\n<p>You can claim your current account interest for tax purposes.<\/p>\n<h3>Building loan interest<\/h3>\n<p>Construction loan interest is deductible as debt interest from the beginning of the use of the property. Before that, it is a matter of non-deductible value-enhancing expenses or investment costs.<\/p>\n<h3>Private loan interest<\/h3>\n<p>Private loan interest is also deductible under the heading of debt interest. Provided you can prove this by means of a loan agreement and payment receipts.<\/p>\n<h3>Interest on arrears<\/h3>\n<p>Interest on overdue federal or cantonal taxes is deductible as debt interest. If you have to pay back taxes, you can also deduct default interest for this.<\/p>\n<p>The tax period in which the back tax was imposed on you is decisive.<\/p>\n<h3>Prepayment penalty<\/h3>\n<p>If you pay off a mortgage early, your bank may charge prepayment penalties. This is how the institute determines the lost interest. A burden that can be considerable depending on the amount of the outstanding residual debt.<\/p>\n<p>Since 2020, prepayment penalties have been recognized as part of the debt interest deduction. The prerequisite is that you replace the redeemed mortgage with a new mortgage with the same lender.<\/p>\n<p>The amount charged is not deductible if you only partially repay the mortgage or reschedule it with another bank.<\/p>\n<p>If the prepayment penalty is incurred due to the sale of a property, it is not to be included in the interest on the debt. In this case, it may be an investment cost for real estate gains tax purposes. Ask your tax advisor about this.<\/p>\n<h2>Credit costs<\/h2>\n<p>Costs for the conversion of debt certificates such as land registration and notarization fees are also deductible. Commissions, expenses or fees to brokerage platforms also reduce your tax burden.<\/p>\n<h2>Leasing interest<\/h2>\n<p>Private lease interest is not deductible because leases are considered rent for tax purposes. It does not help even if the company confirms the debt interest to you.<\/p>\n<h3>Mortgage fees<\/h3>\n<p>If your bank charges you fees for a mortgage (initial or follow-up financing), these are not deductible. Neither as debt interest nor as securities management costs.<\/p>\n<h3>Negative interest<\/h3>\n<p>Negative interest does not fall into the category of debt interest, as it is calculated on credit balances. However, they can be declared as asset management fees. Ask your tax advisor about this.<\/p>\n<h2>How to apply for a tax deduction?<\/h2>\n<p>This is how the cantonal tax authorities recognize your debt interest:<\/p>\n<ol>\n<li>At the beginning of a year, you receive an interest certificate from your bank for the loan. If the financial statement documents are missing, request them from your account-holding institution.<\/li>\n<li>Enter deductible interest on debt on your tax return. They belong, including the residual debt, in the &quot;List of debts&quot; under &quot;Private debts&quot;.<\/li>\n<li>Attach a copy of the interest certificate to your tax return. In the case of private loans, copies of the loan agreement and transfer confirmations or. of cash payment receipts to it.<\/li>\n<\/ol>\n<h2>Conclusion: Debt interest reduces your tax burden<\/h2>\n<p>As a borrower, you can quickly and easily reduce your tax burden by paying interest on your debt. But not every form of credit is deductible. Among other things, you cannot claim the leasing interest for tax purposes. Therefore, it is advisable to weigh whether you are leasing a vehicle or purchasing it through an installment loan. Interest from private loan transactions, on the other hand, can be deducted. Assuming you provide evidence of the loan agreement and the interest payments made.<\/p>\n<p>The small effort is worthwhile. Therefore, do not fail to include your loan interest in your tax return. Due to the high tax allowance of CHF 50,000, you can often deduct the entire interest expense for one or more loans.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Loans are popular in Switzerland. Every third person has or has already had a loan. Many borrowers do not know that debt interest from personal loans is deductible&#8230;<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v19.7.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Debt interest is tax deductible in switzerland - chettioan.com<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/chettioan.com\/debt-interest-is-tax-deductible-in-switzerland-10820.html\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Debt interest is tax deductible in switzerland - chettioan.com\" \/>\n<meta property=\"og:description\" content=\"Loans are popular in Switzerland. 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