Selling your property in the canton of Vaud: a simple guide to real estate capital gains tax

One of these is real estate capital gains tax. In the canton of Vaud, its calculation takes into account not only the difference between the purchase price and the sale price, but also certain expenses, investments and the length of time the property has been owned.

Here are the main points to be aware of in order to prepare for your sale with peace of mind.

The principle is relatively straightforward: the tax is not levied on the total sale price, but on the capital gain actually realised.

In simplified terms:

Net sale price – adjusted acquisition price = taxable real estate capital gain

The adjusted acquisition price corresponds to the price paid when the property was purchased, to which certain acquisition costs and investments made in the property may be added.

Acquisition costs that may be taken into consideration include transfer taxes, notary fees and certain costs related to registration with the Land Registry.

These amounts therefore increase the acquisition price used for the calculation, thereby reducing the taxable real estate capital gain by the same amount.

Certain works that have generated a lasting increase in the property’s value may also be taken into account, such as an extension, major renovation, energy-efficiency improvements, the creation of a terrace or the development of additional living space, for example.

This is why it is important to keep notarial statements, invoices and supporting documents over the years.

Expenses directly related to the sale may also affect the calculation of the real estate capital gain.

This is particularly true of the brokerage commission paid to the real estate agency.

Unlike acquisition costs, which increase the purchase price used in the calculation, brokerage fees are deducted from the sale price taken into account for the calculation.

In the canton of Vaud, the tax rate is progressive in terms of reduction: the longer the property is owned, the lower the rate.

It can reach 30% when a property is resold after a short period of ownership, then gradually decrease to 7% after 24 years of ownership.

The length of ownership is therefore an essential factor in calculating real estate capital gains tax.

When a property has been occupied by its owner as their primary residence, the years during which the property was personally occupied may be counted twice when determining the period of ownership taken into account for calculating the tax rate.

When an owner sells their primary residence in order to purchase a new one, they may, under certain conditions, benefit from a deferral of real estate capital gains tax, known as reinvestment relief.

This means that the tax does not necessarily have to be paid immediately at the time of the sale: all or part of the gain may be deferred to the newly acquired home.

This mechanism can be particularly advantageous when changing one’s primary residence.

As the conditions for reinvestment relief are specific, it is recommended that they be confirmed by the notary or tax specialist handling the matter.

Good preparation makes it possible to approach the sale with a clearer view of the transaction.

It is particularly useful to gather:

• the purchase deed and the notary’s statement;

• supporting documents for acquisition-related costs;

• invoices for major works;

• documents relating to investments made in the property;

• supporting documents for sale-related costs.

These documents facilitate the calculation and enable the owner to better anticipate the net proceeds from the sale.

Every sale is different and deserves tailored preparation.

Thanks to our in-depth knowledge of the local real estate market and our experience with transactions in the canton of Vaud, L’Agence Immobilière Nicole et Catherine Michel supports property owners from the earliest stages of considering their project.

Our aim is to enable our clients to sell their property with peace of mind and under the best possible conditions.

Are you considering selling your house or apartment in the Terre Sainte region or surrounding areas? Contact us to discuss your project and receive a personalised valuation.

The information presented in this article is provided for general guidance only. The final calculation of real estate capital gains tax depends on each individual situation and falls under the authority of the competent tax office.