Questions and insecurities for property owners

  30.06.2020 Gstaad Living

In the canton of Berne, the official value of real estate is increasing. The municipalities in the Saanenland are massively affected. While the municipal coffers are being filled, some property owners will have to dig deep into their pockets.

W ith the revaluation of properties, their taxable value in the three municipalities of Saanen, Gsteig and Lauenen increases massively. In order to take some of the pressure off property owners, the municipalities of Lauenen and Saanen have reduced property taxes for 2020. Lauenen from 1.5‰ to 0.6‰, the tax for the Schwellenkorporation from 1 to 0.35‰.

In Saanen, the property tax has been reduced from 1.5 to 1‰, the tax rate from 1.4 to 1.3 and the tax for the Schwellenkorporation from 0.45‰ to 0.11‰. For the time being, Gsteig has decided not to reduce the property tax. “We have decided to wait until we know exactly by how much the official values will increase,” explains finance administrator Karl Graa.

Equal tax treatment
The aim of the revaluation is to ensure equal tax treatment of real estate owners in different regions and equal treatment between real estate and movable property owners. “When filing your tax return, you must declare your assets. If you have them in a bank account, you have to pay 100 percent tax on them,” explains Kurt Gyger, finance administrator of the municipality of Saanen.

It is different with real estate. The official value is the tax value of the property you own. The tax value does not correspond to 100 percent of the actual value of the property, because one usually takes into account that property owners bear additional burdens such as personal and property taxes, but also other charges that arise in connection with a property – costs one does not have with assets on a bank account.

The last revaluation in the canton of Bern took place more than 20 years ago.

Target value
While the cantonal finance committee aimed at a target value of 70 percent to calculate the official value of a property (i.e. 70 percent of the market value equals the official value, on which in turn taxes are charged), the cantonal government insisted on 77 percent. Eventually the cantonal parliament had the last word and decided to set the rate at 70 percent. The new values will be valid as from 31 December 2020.

Revaluation without visual inspection
It is undisputed that the official values have to be adjusted regularly. However, the period of time that was taken as the basis for the current revaluation draws criticism. “All property transactions between 2013 and 2016 have been taken as the basis,” explains Gyger. This was a period in which real estate trading flourished in the Saanenland. “We have become victims of our own success in recent decades,” Gyger concludes. “Real estate trading has exploded. Unique prices have been achieved, the likes of which cannot be seen anywhere else.” The automated process of the revaluation, which cannot take the specificities of each property into account, is another point of criticism.

A delegation from Saanen presented these concerns to the cantonal authorities. However, the representatives of the region were unable to change the decision from Bern. Even those who had hoped that Hans Schär, who represent our region in the cantonal parliament, would be able to achieve more were disappointed. In an interview, he said he understood the displeasure of the population. However, the cantonal parliament had had no means of reversing the increase or setting it lower.

Massive effects
The readjustment of the official values has massive effects in the Saanenland – on the municipal coffers and on the property owners. According to information provided to the municipalities, a median was calculated for each municipality. Toni von Grünigen, mayor of Saanen, had therefore intervened with the cantonal finance minister Beatrice Simon in Bern. “You cannot lump together an entire municipality,” Gyger says. There should be a division by area in each municipality. “The Oberbort and the Wispile cannot be equated with Abländschen or Grund.”

The currently assumed factors are 2.41 in Saanen, 2.23 in Lauenen and 1.94 in Gsteig. These are the average factors. Some properties will have a much higher value, others a much lower one. So, while property owners are asked to pay, the cantonal and communal coffers fill up.

The revaluation also has an impact on assets. “Many will have to pay wealth tax again,” explains fiduciary Victor Steimle of T&R Oberland AG. A property owner can become a millionaire overnight without having one more penny in his pocket. The canton is expecting an additional CHF 34m in wealth taxes, the municipalities CHF 18m, and the churches CHF 2m.

Negative consequences
The revaluation could have negative consequences for the Saanenland, fears trade association president Jonas Wanzenried. “After the second home initiative and the increase in lump-sum taxation, this is another drastic measure that could scare away second home owners and those subject to lump-sum taxation and encourage them to move away.”

The notional value clearly plays a central role for those who pay lump-sum tax, Gyger says. “The notional value is the basis of taxable income. Currently a factor of 7 is used to calculate taxable income.” There are several ways of dealing with this, he says. “One, stay with lump-sum taxation, two, getting taxed normally with the regular tax returns, and three, moving elsewhere.”

The latter could even be considered by locals, as the tax burden in the canton of Bern is already very high compared to other cantons. And locals can also be considerably affected by the increase in the official value.

An example: a local has taken over a property from an inheritance, had to pay off the siblings and incur debts in return. “The official value may increase so much that with the new property tax, wealth tax, etc., he will have to pay more than an additional monthly salary. One month’s salary every year to cover the increase,” calculates Steimle.

Gyger adds: “If the person is already at an advanced age, draws supplementary benefits and the official value now increases, it is quite possible that the supplementary benefits will be cancelled.” The person’s financial situation may deteriorate to such an extent that the property must be sold. “This scenario might become reality in the Saanenland,” says Gyger.

Notional value, another uncertainty
There are different statements as to whether the notional value is affected by the revaluation. “If the notional value is adjusted, this has a major impact on those subject to flat-rate taxation,” says Steimle. Gyger expects – if at all – moderate changes.
“The notional values have already been massively increased in 2015.” The notional value is linked to the official value. There may therefore be moderate changes compared to the notional value that has been in force since 2015.

Effects on tenants
As Gyger explains, a landlord can pass on the additional burden to the tenant. “The landlord has the right to pass on his costs to the tenant. Nobody can expect the owner of a property to loose money when letting it.

If the costs rise, it entitles the landlord to an adjustment of the rent.” And, of course, the tenant has the right to challenge the increase within 30 days.

Objection period of 30 days
Objections to the new official values may be raised within 30 days. Gyger advises: “As soon as you have the decree and the official value is revealed, you can make a simple calculation.” The official value is 70 percent of the market value, so 100 percent is the market value. Everyone must then decide for themselves whether their property has a chance of being traded on the market at this price. “If the answer is yes, there is no chance of an objection,” Gyger clarifies.

Any objection must be well-founded, Steimle agrees. Anyone who has the feeling that the official value is too high should request the land register. And it is important to get support, to contact someone who understands the subject matter, such as architects, real estate appraisers, trustees, banks, or local authorities.

Objections must be placed with the cantonal tax administration or the local tax appeal commission. The deadline for lodging an objection must not be missed. “The deadline cannot be extended,” stresses Gyger.

Objections, objections, …
A flood of objections is expected in the three municipalities. In Saanen alone, over 3000 properties are affected, in Lauenen around 750 and in Gsteig also around 750. Agricultural properties are not affected. In order to update all the registers, the municipality of Saanen has temporarily increased its staff. Not so the canton of Bern. There is no more staff available than today, said finance minister Simon when asked whether the canton has sufficient resources to deal with the objections.

Unlike the objectors, the canton does not have to meet any deadlines. If an objection cannot b e dealt with before the bills are issued, the new value will be applied. If something will be changed as a result of an objection, there will be a retroactive correction. Therefore, in most cases the new value will be the basis for the invoice issued at the end of the year.

Based on AvS/Anita Moser




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