Buying and using a holiday property: what you need to consider

When buying a holiday property, there are several financial and tax considerations to bear in mind. Banks will finance up to 80 per cent of owner-occupied residential property, but only 50 to 70 per cent at most for holiday homes and holiday flats. The rest must be financed from own funds. Assets from the pension fund and pillar 3a may not be used. Alternatively, an additional mortgage can be taken out on the main residence to pay for the holiday home.

Stricter amortisation obligations apply to holiday homes and holiday flats than to owner-occupied homes. The amortisation rules are not prescribed by law and vary from bank to bank. Most banks require that mortgages for holiday properties be repaid to less than 50 per cent in 10 to 15 years or by the time you reach retirement age.

A holiday property is subject to the same tax treatment as a main residence. The market value of the property is regarded as assets at the taxable location, while the imputed rental value less maintenance costs and mortgage interest is regarded as income at the location of the property. The imputed rental value can vary from canton to canton, regardless of the length of stay in the holiday home

The affordability calculation for holiday properties follows the same rules as for owner-occupied residential property and should not account for more than one third of gross household income. Important: The housing costs are added together for the calculation.

If the holiday home or holiday flat is rented out, the rental income must be taxed as income after deduction of maintenance costs and mortgage interest. In the case of partial letting, the imputed rental value and the rental income are calculated on a pro rata basis.