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Flat in Switzerland that needs to be sold or rented... but how?

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Evie
# Posts: 5
Last Post: 18 Sep, 2013
Date Joined: 18 Jul, 2013
# 1
15:58 Jul 18th, 2013 [14:58 Jul 18th local time]
Hi everyone,

This is a little complicated... a close friend of mine called Jane is in a tricky situation:

Jane's italian mother has just inherited a flat in Switzerland (in the Valais) from her own mother (Jane's grandmother). The grandmother had originally bought the flat in the 70s or so, as a société immobilière or SI - which means it's actually the only asset of a company. It was a legal and popular way of doing things back then, I'm not sure why. It means that the flat doesn't have the name of the owner on it, it's just a company and whoever has the shares (in the form of a paper document) owns the company and hence the flat. So Jane's mother now has the shares of the company, ie the flat.

But Jane's mother doesn't really want the flat and would gladly pass it on to her own daughter, Jane, who is a UK tax payer.

Now the question is: if Jane's mother gives her the shares of the company (ie the flat), how can Jane declare this in the UK? Would it involve inheritance tax, or could it just be a gift?

And if she did this, would she have to pay capital gains tax in both Switzerland and the UK when she sold the property? In Switzerland, she's been told that she would already have to pay 60% on the capital gains in various taxes. If she then had to pay an extra 18% on it, it would defeat the purpose.

The other thing, is that the property costs a lot in fees, charges, maintenance etc, so Jane can't really afford to keep it without renting it. She's looked into renting, but in Switzerland it would seem that taxes on rental are 50% and that she can't offset anything, like maintenance etc against it. Renting it and paying 50% taxes on the income, would still mean that she'd lose out at the end of the year, even if she rented it for the entire year, which isn't allowed anyway since she's not a Swiss resident. Whereas if she rented it as an overseas property and paid the UK taxes (which have some offsetting rules for maintenance etc), she would be able to keep the property.

Can anyone shed any light on whether the Swiss 50% rental tax is applicable or whether she could pay the UK taxes on the rental money only?

And on the issues of whether she can accept the gift of the shares of the flat?

And on whether she'd have to pay capital gains in both countries if she decided she couldn't afford to keep the property and tried to sell it?

I know a lot of questions, and all rather complicated, so any knowledge greatly appreciated by her.

Thanks,

Evie

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