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Switzerland: How buying real-estate can kill you financially/reasons for stocks

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Re: Switzerland: How buying real-estate can kill you financially/reasons for stocks

#31

Post by J-dawg »

uiri wrote: post #29
eldavido wrote: post #27

For anyone reading this in the US: don't take this at face value. This (my opinion) is coming from someone who's indifferent between renting vs. owning, so is trying to make the decision purely on financial factors. Reasons why this article does't apply in the US: (1) The "eigenmietwert" the author writes about is known as an "imputed income tax". The idea is, most assets generate income: bonds pay interest, stocks p…

Which other "Anglosphere" countries promote home ownership the same way that the US does with e.g. mortgage interest deductions? There are many pairs of otherwise culturally similar countries with differing policies on this (e.g. US & Canada, Belgium & the Netherlands).

Could you explain what you mean by mortgage interest deductions? Does it mean that mortgage interest can be deducted from taxable income? Even if that income is unrelated to the property?

In the UK landlords are allowed to deduct mortgage interest from taxable rental income, but this is currently being phased out. (A good thing in my opinion)

Re: Switzerland: How buying real-estate can kill you financially/reasons for stocks

#32

Post by jldugger »

> A financially rational person would consider buying a house if the P/R ratio is 15 or lower.

How does one go about calculating that? Or reading someone else's calculations? For real estate prices I can check out the Case-Shiller, for P/R I got nothing.

Re: Switzerland: How buying real-estate can kill you financially/reasons for stocks

#33

Post by gnaritas »

ryanbertrand wrote: post #8
alecco wrote: post #2

Buy a small place enough to live. If you take a mortgage pay it as soon as possible to be debt-free. Then invest in diverse things with best return while being tax smart. Perhaps barbell method.

Switzerland makes home owners pay taxes as if they rented the house out for 12 months each year. This could add a nice chunk to your net cost of owning.

Wouldn't it be more accurate to say they don't give special treatment to home owners over renters? Sounds more fair to me.

Re: Switzerland: How buying real-estate can kill you financially/reasons for stocks

#35

Post by gnaritas »

tonfa wrote: post #24
corford wrote: post #12

Earlier quoted context omitted.

Which I guess most landlords would simply pass on to the tenants?

If they rent it they pay income tax anyway (or rather the company that owns the place does). The "virtual rent" added to income is for people who own the place where they live. Switzerland is not very home ownership friendly, at least there are very little tax incentives for it (personally I'd rather have people invest their wealth into productive things rather than real estate, so I find it good). In large cities mo…

I wouldn't call not giving special privileges to home owners over renters unfriendly, I'd call it neutral and fair.

Re: Switzerland: How buying real-estate can kill you financially/reasons for stocks

#36

Post by s3nnyy »

eldavido wrote: post #27

For anyone reading this in the US: don't take this at face value. This (my opinion) is coming from someone who's indifferent between renting vs. owning, so is trying to make the decision purely on financial factors. Reasons why this article does't apply in the US: (1) The "eigenmietwert" the author writes about is known as an "imputed income tax". The idea is, most assets generate income: bonds pay interest, stocks p…

OP here: In Switzerland you can also deduct interest on a mortage but the interest is like > Why you can't deduct interest on credit cards or auto loans, but you can on mortgage interest, beats the hell out of me?

That sounds logical to me as well. In a way, a house is just a huge "consumer credit".

Re: Switzerland: How buying real-estate can kill you financially/reasons for stocks

#37

Post by lwkl »

ryanbertrand wrote: post #8
alecco wrote: post #2

Buy a small place enough to live. If you take a mortgage pay it as soon as possible to be debt-free. Then invest in diverse things with best return while being tax smart. Perhaps barbell method.

Switzerland makes home owners pay taxes as if they rented the house out for 12 months each year. This could add a nice chunk to your net cost of owning.

That's the reason why Switzerland has such a high per capita debt [1]. You can deduct your interest payments from the tax payments. So there is an interest to stay indebted for homeowners. My parents own a house that they inherited from my grandparents including a debt but both wouldn't pay off the mortgage because of tax reasons.

[1] https://www.swissinfo.ch/eng/wealth-ranking_swiss-are-world-...

Re: Switzerland: How buying real-estate can kill you financially/reasons for stocks

#38

Post by TheAdamAndChe »

massaman_yams wrote: post #28
walshemj wrote: post #17

Earlier quoted context omitted.

yeh a lot of investment pros are worried that the market is getting to high I am wondering if I ought to take some of my profits and buy gold etf's or just got cash and wait for the fall to buy back in

Professionals are often wrong, and timing the market is more difficult than it might seem - in no small part because many investors are unable to prevent emotions from affecting their trading decisions. That said, it's entirely possible that the market is irrationally high; the question then becomes how long it can remain that way. There's a famous Keynes quote - “The market can stay irrational a lot longer than you…

I seriously wonder how index funds have affected the volatility of the stock market. The stock market has been growing independent of popular sentiment or trust in growth, which makes me wonder if the growth is driven by a massive number of people automating their investments through index funds and just forgetting about it.

Re: Switzerland: How buying real-estate can kill you financially/reasons for stocks

#39

Post by iagooar »

Yeah Switzerland is great as long as you don't have children. Once you get a child, well, you're out of luck. Childcare in Switzerland is the craziest expense I've seen in my life, where having your kid looked after for 5 days a week will cost you 2-2,5k CHF / USD per month! And if you have a second child, they might give you 10% discount. So around 4,5k USD per month for 2 kids. It's madness!

Besides that, you will need to leave your shared apartment and go looking for one with at least 4 rooms. That'll easily cost you 2.5k-3.5k per month.

So while I agree that Switzerland is a nice place to be while 20-30, after that age it hugely depends on your situation. Got 2 kids and know some German? You might actually be better off in Germany.

Re: Switzerland: How buying real-estate can kill you financially/reasons for stocks

#40

Post by s3nnyy »

iagooar wrote: post #39

Yeah Switzerland is great as long as you don't have children. Once you get a child, well, you're out of luck. Childcare in Switzerland is the craziest expense I've seen in my life, where having your kid looked after for 5 days a week will cost you 2-2,5k CHF / USD per month! And if you have a second child, they might give you 10% discount. So around 4,5k USD per month for 2 kids. It's madness! Besides that, you will…

OP here. I disagree with everything you said.

> having your kid looked after for 5 days2-2,5k CHF / USD per month!

Yes but only when your kid is 2-3 years old. After that kindergarten is free. Superb elementary school, high-school is free; and on top Uni-Zurich and ETH, the MIT of Europe, is also almost free (costs like 500$ a semester).

> Besides that, you will need to leave your shared apartment and go looking for one with at least 4 rooms. That'll easily cost you 2.5k-3.5k per month.

Why? You're probably referring to some regulations. Well, if you have a wife and one kid, you can legally even live in a 1-bedroom apartment (formula for legal limit of grown-up people per apartment is "# of people = # of rooms + 1" - source p. 29: https://www.ekm.admin.ch/dam/data/ekm/dokumentation/material...)

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