Purchase costs when downsizing to a senior apartment

Moving in later life from your own house to a smaller apartment means incidental costs on both sides of the transaction. On the purchase, that is around 1 to 5 per cent of the price – transfer tax, notary, land registry and mortgage certificate, varying widely by canton. On the sale, the agent’s commission and property gains tax are added. Together that quickly reaches 4 to 8 per cent of the sums involved. The bank finances none of it: these amounts have to be available on top of your equity.

What counts as incidental purchase costs?

Four items, all unavoidable, but very different in size:

Item	Order of magnitude	Who pays
Property transfer tax	0 to 3.3 % of the price	usually the buyer, set cantonally
Notary fees	0.1 to 0.5 % of the price	usually the buyer
Land registry fee	0.1 to 0.5 % of the price	usually the buyer
Mortgage certificate	0.1 to 0.3 % of the pledged sum	the buyer

Important for planning: the bank finances at most 80 per cent of the purchase price or the lower lending value. The remaining 20 per cent equity and the incidental costs have to come from you. How the bank calculates after retirement is explained in the guide on mortgages after retirement.

Transfer tax: why the canton makes the difference

The property transfer tax is by far the largest and most variable item. It is levied on the purchase price; in most cantons the rates lie between about 1 and 3.3 per cent, sometimes with municipal surcharges on top.

Several cantons do not levy it at all – among them Zurich, Zug, Schwyz and Aargau. There, at most a comparatively small handling fee applies. In French-speaking Switzerland the tax is often at its highest.

Particularly relevant when downsizing in later life: some cantons grant relief for owner-occupied residential property – reduced rates, allowances, or exemption when acquiring a main residence. Since a senior apartment is almost always owner-occupied, it is worth asking the cantonal office or notary before you budget. Overviews of cantonal taxes are published by the Federal Tax Administration FTA; the actual rates are on the cantons’ own websites.

Notary, land registry and mortgage certificate

In Switzerland every contract for the sale of real estate must be publicly notarised – without a notary there is no transfer of ownership. Fees are set cantonally and typically lie between 0.1 and 0.5 per cent of the price. Cantons with a state notariat have fixed tariffs; where notaries operate freely, it is worth getting a quote in advance.

Then comes the land registry fee for the entry, usually also 0.1 to 0.5 per cent. Only with that entry do you legally become the owner – not on signature.

The mortgage certificate is the charge over the property securing your mortgage. Creating one costs around 0.1 to 0.3 per cent of the pledged sum. There is real saving potential here: if a certificate of a suitable amount already exists on the property, it can usually be taken over cheaply. Ask about it early.

And on the sale side?

Moving out of your own home adds two further items that have nothing to do with the purchase:

Agent’s commission. In Switzerland the seller usually engages the agent and pays the commission, typically 2 to 3 per cent of the sale price plus VAT. As a buyer you generally owe nothing – check the paperwork anyway, as attempts are occasionally made to shift commissions or “reservation fees” onto the buyer. A reservation payment without a notarised preliminary contract is legally delicate.

Property gains tax. The canton or municipality taxes the gain between the original purchase price plus value-adding investments and the sale price. After a long holding period it is often more moderate than feared, because many cantons reward long ownership with reductions. And if you use the proceeds to buy another owner-occupied home, a replacement-property deferral is possible – including for a smaller apartment, but only for the reinvested portion. Details in Adapt or sell?.

Worked example: the same move, two cantons

A married couple sells the family house for CHF 1 200 000 and buys a senior apartment for CHF 850 000. The mortgage on the new apartment is CHF 400 000.

Item	Canton with no transfer tax	Canton with 2 % transfer tax
Transfer tax	CHF 0	CHF 17 000
Notary (0.3 %)	CHF 2 550	CHF 2 550
Land registry (0.3 %)	CHF 2 550	CHF 2 550
Mortgage certificate (0.2 % of CHF 400 000)	CHF 800	CHF 800
Total incidental purchase costs	CHF 5 900	CHF 22 900
Agent’s commission on sale (2.5 % of CHF 1 200 000)	CHF 30 000	CHF 30 000
Combined, excluding property gains tax	CHF 35 900	CHF 52 900

Property gains tax comes on top and depends on your situation – it can exceed this amount again, or be deferred entirely through a replacement purchase.

How to budget properly

1. Check the canton. One call to the cantonal notariat or tax office settles the rate and any relief for owner-occupied property.
2. Ask for a provisional property gains tax calculation. The tax office will work it out before you publish the listing.
3. Gather receipts for value-adding investments. Every documented renovation reduces the taxable gain – an age-friendly conversion included.
4. Check for an existing mortgage certificate. In the best case this saves a four-figure sum.
5. Plan a reserve. The move, clearing out the old home and any adaptations in the new apartment are in none of these figures.

Summary

• Incidental purchase costs are around 1 to 5 per cent of the price depending on the canton, and the bank does not finance them.
• The transfer tax makes the difference: none in Zurich, Zug, Schwyz and Aargau, up to 3.3 per cent elsewhere.
• Moving out of your own home adds an agent’s commission of 2 to 3 per cent plus property gains tax.
• Relief for owner-occupied property is worth asking about – a senior apartment almost always qualifies.
• A replacement-property deferral is possible when downsizing too, but only for the reinvested portion.