r/SwissFIRE • u/refl1pper • 9d ago
What to do with 200k+ CHF at 26
My parents are retiring early EOY, leaving Switzerland to go back to their home country and FIRE. Instead of inheriting the assets to me directly, my dad wants to sell the assets to me for a discounted price (keeping capital gains tax on the property small).
This would require me to take a mortgage on the assets (initial down payment would be provided by my parents). The mortgage would then be used to pay back the down payment as well as pay off the remainder of the assets (around 100k-150k CHF left to pay off). This would leave me with around 200k+ or even more depending on what price we settle on.
I (26) have a high paying job and can stem the mortgage payments easily (first time mortgage would be around ~0.9% interest rate for now at the bank of my choice). I already have around 30k invested in a diverse ETF portfolio, and ~12 months of leeway in my savings account.
Is this a good idea?
If yes, what should I spend it on?
Getting another mortgage with this money as a downpayment? DCA the money into ETFs over a longer timeframe? Other options?
If no, what alternatives are there?
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u/biglyhonorpacioli 9d ago
Wouldn't tax authority realise it's not arms length price and tax your parents based on market price? IDK if they go that far though.
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u/refl1pper 9d ago
If it's 25% below market price, it's considered a mixed gift and taxation is deferred until I sell the property. Anything between the 75% - 100% market value range would be taxed normally, and if I sold the property, the taxation is based on that selling price (meaning less capital gains tax overall in the future).
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u/fabkosta 9d ago
Not sure what you mean with "mortgage" and "assets". Note there are legal limitations on what you're allowed to take debts on, mortgages are usually reserved for real estate. If these are financial assets, then I doubt you're allowed to take a consumer credit for that purpose.
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u/suddenly_kitties 9d ago
With Eigenmietwert gone in 2029, assuming that you want to live there and stay in Switzerland yourself for the foreseeable future, I would simply pay off the mortgage, enjoy the appreciation if it's in a good location (the numbers make me assume it's in the sticks rather than Kreis 1) and then re-evaluate in a couple of years. Gives you meaningful headroom for additional savings/investments, working 80% for a while and do a Master, etc., and at least you won't have to worry about tenants screwing the place up or the admin overhead of renting it out.
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u/refl1pper 9d ago
Thanks for your input. It's in the Sargans area, so good access to 3 major cities in the region, as well as close to FL. Numbers are conservative. I foresee myself living here for at least 2-3 more years before I move out closer to Zurich when my partner finishes her studies.
The "problem" is I already completed my bachelor & master at ETH and don't really see the need working 80% for now. So it's really just how can I invest the money in the most efficient way.
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u/BellaFromSwitzerland 9d ago
With this additional information, only do it if you plan to keep the property for 5-10+ years
Normally if you buy it as your primary residence, you can do it with 20% down payment. If you buy it as an investment property, you need 33% down payment
The longer you keep it, the less taxes you pay on the appreciation
Furthermore, the advice above to pay off the mortgage is currently still wrong because you got a 0.9% interest rate which is excellent
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u/i-var 8d ago
for efficient investing - buy etfs with low fees - use LLMs for the research - good summaries of FIRE people you can get there - keep it simple (a few ETFs) - hardest thing: estimate your risk tolerance - this is hard to do, you'll see if youre right if you manage not to sell on the next financial crisis - again ask LLMs for more. Good luck
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u/sintrastellar 8d ago
How would this leave you with 200k?
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u/refl1pper 8d ago
Fictional numbers, but for you to get the jist:
- You buy your 400k CHF parent's house for 300k CHF. The 100k CHF discount is a "gift."
- You get a 300k CHF mortgage. The bank accepts the 100k CHF gift as your 20%+ down payment.
- The bank gives your parents 300k CHF.
- Parents use 130k CHF (65% of the 200k mortgage) to kill their old mortgage, leaving them with 170k CHF cash.
- Parents pay ~20k CHF in property gains tax and fees, walking away with 150k CHF clean cash which they gift you.
So essentially you have 150k CHF at very low interest rates.
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u/julia-l-rule 8d ago
Whatever you do, do NOT open an interactive brokers account and do NOT start trading options or do multiple trades per day. You ARE going to lose everything. Buy something boring, something you never look at, look at the fees, these are your biggest costs. Don't go with traditional banks. Saxo, finpension, VIAC are all good. I personally have a lot of physical metals at the moment, but I'm also a strong follower of Peter Schiff. He's a contrarian and you'd have to decide for yourself if you agree with him.
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u/yakitori888 9d ago
It’s a great head start into building your own FIRE portfolio. Keep it simple and just DCA into more ETF