Ongoing costs when buying real estate: This is how much you have to plan for!

Ongoing costs when buying real estate: This is how much you have to plan for!

When buying real estate, future owners not only have to keep an eye on the price of the property itself, but also take into account the numerous ongoing costs. These additional expenses can quickly add up to a low five-figure amount per year, like nau.ch reported.

One of the most important items is insurance costs. In Switzerland, building insurance is mandatory in 19 cantons; it is recommended in other cantons. This insures owners against damage caused by fire and natural events. The costs for such police insurance (GVG) are between 500 and 1000 francs annually and can increase significantly. In 2023, GVG paid 342 million francs for damage caused by natural events such as storms. In La Chaux-de-Fonds alone, the damage totaled 117 million francs.

Important insurance and ongoing costs

In addition to the mandatory building insurance, there are optional policies, such as building water and tap water insurance as well as building glass insurance. These are particularly advisable for new buildings. Building liability insurance is also recommended for landlords, while private liability insurance covers damage to third parties in the home.

The ongoing costs also consist of water and sewage fees, electricity and heating costs. Water prices range between 1 and 2.50 francs per cubic meter, while electricity prices vary greatly. If you generate your own electricity, for example through a photovoltaic system, the electricity costs can be reduced, but the amortization costs of the system must be taken into account.

The need for reserves for maintenance and repairs is another critical point. A rule of thumb is to save 0.5 to 1.0 percent of the property's value annually. If you own a property worth 1.5 million francs, reserves of 7,500 to 15,000 francs per year would make sense.

Tax aspects and mortgage interest

Another central issue for property owners is the imputed rental value. This is a concept that has significant tax implications. The imputed rental value is calculated based on the potential rental income and must be taxed as income. This can be financially burdensome as homeowners pay taxes on fictitious income that they do not receive. The amount of this imputed rental value depends on the value of the residential property. In most European countries there is no such concept.

Financial planning also includes taking mortgage interest into account. Homeowners must pay annual interest on mortgages, the amount of which depends on the specific mortgage. Especially with a second mortgage, it must be paid off within 15 years. Due to the uncertainty in the financial market, mortgage interest rates could rise in the future.

In summary, welcome it immoscout24.ch, that the information received is fundamental for anyone thinking about buying a home. Before buying a house, all financial aspects and the associated running costs should be carefully considered to avoid unpleasant surprises.