Real Estate: Switzerland vs. Neighboring Countries – A Buyer’s Comparison

Published on October 3, 2025 and written by Cyril Jarnias

In an ever-evolving economic context, real estate purchasing presents various challenges and opportunities that vary significantly depending on geographic location. This article aims to explore the nuances and specificities of the real estate market in Switzerland, renowned for its stability and security, by comparing them to the markets of neighboring countries such as France, Italy, and Germany.

We will examine key factors like mortgage interest rates, legal regulations, as well as long-term profitability prospects. Whether you’re a seasoned investor or a potential buyer, this comparison offers valuable insight to help you make an informed and strategic choice.

Tax Differences Between Switzerland and Its Neighbors

Criterion	Switzerland	France	Germany	Italy
Real Estate Income Taxation	Average rate 33% (varies by canton), broad deductibility, no social charges	20-30% + social charges (17.2%); limited deductible expenses	Progressive scale up to 45%, no social charges, broad deductibility, deductible property deficit	Progressive IRPEF taxation (23-43%), flat tax possible for non-residents on rental income (21%)
Capital Gains Tax on Real Estate	Exemption after variable duration by canton; frequent sales taxed more heavily; primary residence often exempt	Exemption after 22 years for tax and 30 years for social charges; max rate approx. 31.3%	Exemption after 10 years of ownership; otherwise progressive scale without social charges	Exemption if property held >5 years or used as primary residence >1 year before sale
Wealth Tax	No federal tax but cantonal taxes: e.g., Geneva: 0.3 to 0.8%; high net base	IFI: progressive scale from 0.50 to 1.50% above €800,000, with numerous exemptions	No national wealth tax	No national wealth tax since its abolition in recent years

Structural Specificities of Tax Systems

• Switzerland: Highly decentralized system; each canton sets its own tax rates and offers specific regimes that may include deductions or local incentives for real estate investment. This implies significant territorial heterogeneity and sometimes tax competition between cantons favoring certain investor profiles or wealthy residents.
• France: Centralized system with some local variations through property taxes managed by local authorities. The state maintains a high overall level of real estate and wealth taxation.
• Germany: Moderate fiscal federalism; local taxes predominant in some areas but national rules majority for real estate income taxation.
• Italy: Hybrid system with national taxation supplemented by significant municipal taxes (notably IMU) whose amounts vary by municipality.

Factors Influencing Real Estate Acquisition

• Specific Tax Incentives:
  • Switzerland: Some cantons offer attractive regimes to new wealthy residents (“lump-sum taxation”).
  • France: “Pinel”, “Denormandie” schemes, etc., allowing temporary tax reduction for rental investments under strict conditions.
  • Germany: Broad possibility to deduct interest/loans/actual expenses from taxable rental income; deductible property deficit.
  • Italy: Flat tax possible for foreigners moving to Italy (“impatriati”), IMU reductions in certain areas.
• Significant Variation in Local Taxes:
  • Particularly marked in Switzerland between cantons/municipalities;
  • In France via property tax/residence tax;
  • In Italy via variable IMU/TASI.

Potential Tax Advantages for Foreign Investors

Switzerland attracts due to its relative tax stability and personalized offers in certain cantons despite restricted access to the main residential market for non-EU non-residents.

Germany is appreciated for its relative administrative/tax simplicity regarding rental income as well as its near-total absence of personal wealth taxation.

Recent Concrete Examples

The same real estate capital held in Geneva is taxed at approximately €15,300 while in France it would be subject to approximately €9,000 under IFI – but with more exemptions on the French side particularly for primary residence.

Since the French reform effective January 2024, the minimum period required for full capital gains exemption is now twenty-two years compared to ten previously — while in Germany it remains fixed at only ten years.

In Italy for several years, the minimum period granting full exemption remains around only five years for any property not resold within this timeframe… four times less than in France today.

Key Points

• The gaps are major both in effective level and in the very structure of the tax system applicable to private real estate investments.
• Switzerland stands out mainly for its highly localized/decentralized model allowing fine optimization based on canton/municipality choice.
• Recent French reforms have tended to durably increase effective taxation on all transactions outside primary residence.
• Germany has long favored attractive regulatory/fiscal stability while Italy maintains a flexible framework regarding necessary periods before any full exemption in case of quick property resale.

Tax Advantages of Real Estate in Switzerland

In Switzerland, real estate owners benefit from several specific tax reliefs, which have long constituted a comparative advantage against the taxation systems of neighboring countries. The main mechanisms include:

• Mortgage Interest Deduction: Until end of 2026 (reform in progress), interest paid on a mortgage loan is fully deductible from taxable income. This encourages many buyers to maintain high debt to optimize their tax burden.
• Imputed Rental Value Taxation: Owners must declare as fictitious income the theoretical rental value they could have received if they rented their property. This amount is added to taxable income but allows, in return, full deduction of maintenance costs and mortgage interest.

A major reform adopted end of 2024 however plans for the gradual elimination of imputed rental value taxation starting 2027. This reform will also entail a correlated elimination of the right to deduct mortgage interest on primary residence:

• For heavily indebted owners, this means a potential tax increase.
• For those who have repaid their debt, it represents tax relief since they will no longer have to declare this fictitious income.

In certain cantons like Geneva, complementary measures exist:

• The CASATAX law offers significant reduction (up to CHF 20,616) on registration duties during purchase and up to 50% on fees related to the mortgage schedule for a primary residence whose price does not exceed CHF 1,374,396 in 2025.
• Regular revaluation of property tax values (+12% in 2025) to more fairly adjust the taxable base.

Comparison with Neighboring Countries

Country	Mortgage Interest Deduct.	“Imputed Rental Value” Tax	Specificities
Switzerland	Yes (until 2027)*	Yes (elimination from 2027)*	Significant deductions; major reforms planned
France	No	No	No fictitious taxation; mortgage credit little valued fiscally
Germany	No (primary residence)	No	Limited advantages except for rental/professional investment
Italy	Limited	No	Small deduction possible for primary residence

*Swiss reforms will align the Swiss system more closely with its European neighbors: after announced elimination (from application around 2027), it will no longer be possible to tax this value nor systematically deduct all financial expenses.

Concrete Examples

• In Switzerland today: An owner with CHF 800,000 mortgage and CHF 15,000/year interest saves this equivalent annually on their tax base as long as the current regime lasts.
• In France or Germany: Interest paid is not considered in taxable income calculation if for own residence; only certain expenses related to rented or professionally exploited properties are allowed.

Overall Effect on Real Estate Investment

Swiss tax advantages have long favored purchase over rental and encouraged high debt levels among acquiring households. With their upcoming partial reconsideration, investing in Swiss real estate will lose its specific attractiveness compared to French or German markets where these tax incentives are lesser or non-existent — except particular cases of rental housing/professional investment where certain mechanisms remain very targeted.

Key Takeaway

• Until 2027 inclusive: Switzerland remains attractive thanks to its broad possibilities for tax deductions related to real estate financing.
• From full implementation of reform: Gradual elimination further aligning its real estate taxation with that practiced by its major European neighbors; direct impact expected especially for those who finance their purchases mainly through bank loans.

Comparison of Real Estate Regulations

Regulatory Aspect	Switzerland	France	Germany	Italy	Austria
Purchase Restrictions for Foreigners	Strong regulation (Lex Koller), quotas and strict authorizations by canton	Occasional restrictions, mainly for secondary residences in tight zones	Few restrictions, except specific border areas	Restrictions on certain property types and tourist regions	Little to no notable restrictions
Acquisition Taxes	Variable duties by canton (approx. 1-3%), LEFI/IBGI tax reform from 2025	High transfer duties (5-6% on average), annual property tax	Grunderwerbsteuer: approx. 3.5–6.5% depending on Länder	Variable imposta di registro (2–9%), additional local taxes	Grunderwerbsteuer: approx. 3.5%, possible ancillary taxes
Environmental Requirements	High Minergie standards; increasing demands on energy efficiency	RT2020/RE2020 impose strict standards; mandatory energy renovation	Very strict Energieeinsparverordnung; renovation subsidies	Obligation for energy improvement during transactions	Increasing standards but less severe than DE/FR/Switzerland
Transaction Procedures	Notary mandatory; generally fast timelines	Notary mandatory; sometimes lengthy administrative procedures	Notary or lawyer required; variable duration	Notary required; relatively fast procedure	Notary or lawyer required; rather smooth procedures
Rental/Ownership Regulations	Strict federal law on rents, limited indexing from January 2025	Highly developed tenant protection law	Protective law with rent caps in several cities	Moderate to strong regulation depending on region	Flexible contracts but increased tenant protection since recent reforms

Summary by Country and Recent Trends

Switzerland

• Effective January 1, 2025 of LEFI and IBGI laws: modernized taxation with annual adjustment capped at +1% for real estate tax values.
• Market characterized by limited supply despite recent slight increase.
• Rents expected to rise on average (+1.9%) for the year.
• Strong protection against foreign speculation.

France

• Recent years have seen strengthening of environmental obligations with RE2020.
• Acquisition duties remain high.
• Strong rent control in certain metropolitan areas.

Germany

• Recent extension of rent caps (“Mietendeckel”) in several major cities.
• Emphasis on energy renovation through public subsidies.

Italy

Successive reforms strengthen energy controls during sales. Stable but regional taxation.

Austria

Simplified procedures compared to Germanic neighbors. Slight evolution towards more tenant protection.

Common Key Points

• Constant increase in ecological requirements everywhere.
• General trend towards fiscal or administrative tightening facing post-pandemic real estate boom (notably Switzerland & France).
• Swiss rules remain among the most restrictive for foreign access and real estate taxation evolves rapidly from early 2025.

Key Takeaway
Switzerland stands out for its high level of regulation towards foreign buyers and its innovative tax policy effective early 2025. Its neighbors each display their specificities: significant weight of French social housing law; German emphasis on local public control; Italian pragmatism and relative Austrian flexibility regarding international transactions.