Six ways to reduce your taxes in 2016

There are less than three months left before the end of the year and you still have some time to think about the ways to optimize your tax burden for the 2016 tax period in Switzerland. Here are some of the possibilities you can choose.

Solution 1: If you are planning to move in your canton, find the municipality with the lowest tax rates. Maybe it will be a good idea to report the decision for next year if you are changing for an area with higher taxe rates.

Solution 2: If you are planning to renovate your house, (even if abroad) the tax office gives you the choice between a fixed rate of deduction of the expenses and a real one, based on the invoices for the project. Try to concentrate the big works in one year in order to opt for the second possibility at once.

Solution 3: Invest in a 3rd Pillar savings plan. This option provides various benefits. Not only it gives you an interest rate on your savings, but it also gives you a tax deduction which in medium is around 2300-2500 CHF of less taxes per year.

Solution 4: Years of Pension / LPP buy-back. If you decide to buy years of pension (called also 2nd pillar or LPP), this investment will be tax deductible. It often is a good option for people who are planning to invest later in a real estate project and use the LPP capital, or leave Switzerland after more than 3 years. For this, you only have to contact your employer’s pension fund.

Solution 5: Interests on a mortgage. If you have a mortgage, its interests are deductible, even if your house is not in Switzerland.

Solution 6: If you buy a house in Switzerland, opt for the indirect amortization of the mortgage. Instead of paying directly the mortgage, you can invest in your 3rd pillar (indirect amortization). Thus, not only the debt level and the interests will not change, but you will also receive interests on your capital. This option is also positive because you will be covered better in case of bankruptcy and also, in case of death, the insured amount will stay out of the inheritance capital.