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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

#71

Post by hkmurakami »

minikomi wrote: post #69
cgb223 wrote: post #9

Earlier quoted context omitted.

Makes sense A lot of Chinese nationals are buying property in the states and Canada in order to accomplish the same thing I wonder how this kind of cash parking affects property values?

Is it possible to create "real estate" which is basically geared towards this kind of thing? Eg. a large vertical block of tiny, tiny rooms which are just good enough to be livable, but with extremely expensive components.. designed to be parked and traded and never lived in.

Such highrises seem to exist in china. (Refer to their real estate speculation bubble)

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

#72

Post by toomuchtodo »

jacalata wrote: post #48
bartc wrote: post #41

Earlier quoted context omitted.

Right, in the US, you can deduct mortgage interest and property taxes to lower your taxable income. There is a mortgage cap of around a million dollars where the deduction ends, which is only relevant in a small number of real estate markets like California, Seattle, New York, and so on.

Note that this only applies to the mortgage on the house you live in, not for landlords.

You can deduct the mortgage interest on a rental property against the income from that property.

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

#73

Post by legulere »

s3nnyy wrote: post #40
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…

> and on top Uni-Zurich and ETH, the MIT of Europe

Universities are way more on a level field in Europe than in the US. “Elite” universities will just be marginally better than good universities that come in the dozens and you probably haven’t heard of.

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

#74

Post by RHSman2 »

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…

This is the biggest negative of switzerland. It's like a 'tax' for living in an amazing, amazing place. I am very happy for my 2 kids to grow up here though and that cost is relative to me. Relative in that it is 'just' acceptable. Taken me a while to say that though.....

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

#75

Post by evandijk70 »

legulere wrote: post #73
s3nnyy wrote: post #40

Earlier quoted context omitted.

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…

> and on top Uni-Zurich and ETH, the MIT of Europe Universities are way more on a level field in Europe than in the US. “Elite” universities will just be marginally better than good universities that come in the dozens and you probably haven’t heard of.

Though it is true that Universities are on a level field in Europe, I feel that ETH Zurich is a bit of an exception to this rule, it really is talked about in a different way than other universities in Europe.

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

#76

Post by RHSman2 »

In switzerand, you buy a house to live on, not to profit on. First 5 years you are heavily taxed if you sell. When I got my mortgage they capped morgages as they knew there was a bubble starting. As a single, somewhat lonesome country the objective function is to manage stability. (Not that I know anything about economics)

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

#77

Post by frankmcsherry »

s3nnyy wrote: post #47
joshuaheard wrote: post #44

A couple flaws in the article. If you don't buy a house but buy stocks, you will pay rent. According to the numbers in the article, this nearly cuts the stock return in half. Also, the article states you will lose money on the depreciation of the building, but does not take into account the appreciation of the land. The land appreciation is highly leveraged, as well, since most people typically place only 20% down on…

OP here. I think I wrote: > "the land doubled in value and is worth 200k CHF" Even if you add up not having to pay rent and possible sale of the house (on which y) you would still end up much better with stocks: House: You buy the house, after 30 years let's say the value stays the same: You own 500.000 CHF worth of house. (Assuming you had no repairs and the value stayed the same, which is VERY optimistic). You sell…

> Is there anything I am missing?

Like, lots, I think.

I don't own property in Switzerland, but you write as if property transactions are in cash up-front. Instead, you put some money down (why the GP mentioned leverage), and the amount you don't make back by investing in stocks is this opportunity cost. The amount saved in rent is also subject to compound interest; unless you are worried that this person is a serial home purchaser those savings will be invested in the market.

I'm sure you can come up with more details and that the market probably wins, but you asked what you were missing.

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

#78

Post by EADGBE »

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…

Yeah, I'm not sure daycare anywhere is cheap.

3 kids, US Midwest, 36k/yr for daycare.

I'm honestly looking at it as a huge bonus (paid to myself) after 4-5 years. It keeps me from crying.

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

#79

Post by EADGBE »

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…

(1) Personal Property Taxes also do this. Does you state not have these? (Jealous). Just saw more of your post, wasn't aware of lack of reassessment. Not sure that's the case for me.

(2) I'm sure deductible mortgage interest is a thing because the government has determined it's better to own a home (to them) than to rent it. Much better than "owning" credit cards and getting a break on those once a year. Plus you've got phase-outs when doing taxes, etc. Of my student loans, only a small fraction of them get a deduction on interest, regardless of how many other ones I have.

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

#80

Post by iagooar »

marklit wrote: post #43
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…

I have to argue that there are both tax rates and job opportunities available in Switzerland that you'd be hard pressed to find elsewhere in Europe. If someone it taking home ~300K CHF / year in some sort of support role in a bank in Zurich the above overheads don't seem to be such a deal breaker.

300k / year? You must be dreaming. In IT you are lucky if you get 120k.
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