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Sancho Panza

Plunge In Geneva Property Prices Amid Uncertainty Over Tax

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Telegraph 3*9*13

' Property prices in Geneva are tumbling amid uncertainty over future tax breaks for wealthy foreigners.

Rich expats are drawn to Geneva partly by a 150-year-old tax break that allows them to massively reduce their income and wealth tax exposure.

The system allows foreign nationals to pay a flat fee — called a forfait – to their local canton. It is worked out based on the rental value of their property rather than their income or assets and is paid in lieu of ordinary wealth and income taxes.

Ordinary federal and cantonal tax rates are applied to the rental value and there is no obligation on forfait holders to declare worldwide income or assets.

The slump in Geneva’s luxury market has seen the average house price in Switzerland’s second biggest city fall one per cent to 2.6 million francs (£1.8 million) in the first half of 2013 from a record high in 2011, according to consultants Wuest & Partner.

Houses in Geneva valued at 6 million francs (£4.2 million) and above have plummeted up to 25 per cent in the past 12 months.

The city is a magnet for wealthy Europeans not just because of its tax breaks. It enjoys a high quality of living, safety and education. It is also less than a two-hour drive from the upmarket ski resorts of Chamonix and Verbier. '

I always remember reading this Economist article in Geneva airport in 2003, as it was the first time I'd seen the houisng bubble mentioned in print.

Edited by Sancho Panza

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Interesting. The Swiss, to their chagrin at times, along with the UK and US were beneficiaries of the huge capital flows that came out Europe after Greece collapsed. The ECB's decision at the beginning of 2013 to allow the early repayment of emergency LTRO funds has reversed those capital flows. A softening of Swiss property prices would seem to be consistent with that.

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If the Swiss Franc drops from its current strong position then there could be a double-whammy for foreign owners (though a fall in currency could well support nominal price increases locally...).

It's a lovely part of the world to live in though - was visiting in the locality a short while back - and anyone offered the chance to move there from a job in the London rat race should jump at the chance IMO.

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It's a lovely part of the world to live in though - was visiting in the locality a short while back - and anyone offered the chance to move there from a job in the London rat race should jump at the chance IMO.

I've got a friend who did the opposite - decided to stay in London and look for a new job when the firm relocated to Geneva - mad, I thought! - he said life for a single person in Geneva would be too boring.

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I've got a friend who did the opposite - decided to stay in London and look for a new job when the firm relocated to Geneva - mad, I thought! - he said life for a single person in Geneva would be too boring.

There is quite a strong ex-pat scene but I agree, boring city full of boring people, by and large.

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