I want to bequeath my house. What must I consider?

There are three ways to transfer a property to the next generation during your lifetime: sale, anticipatory succession and donation.

What happens if you sell

If you sell to your children, you can consolidate your financial situation and make provisions for later, for example at an age-appropriate residential care facility. What’s more, the cost of the sale and in some cantons the transfer tax are eliminated during such a handover to your descendants.

The agreed family price for a property is often below the current market value. This should make purchasing the family home financially interesting for your children.

What happens with anticipatory succession

In the case of anticipatory succession, you transfer the house to your children either free of charge or at a price below the market value. The difference to the market value is then considered anticipatory succession. This amount is deducted from the value of the inheritance.

The receiving child therefore has an obligation to compensate any other siblings. It is advisable to record the agreement in writing.

What happens in the case of a donation

With a donation, you transfer the property without a financial consideration. One special case is a mixed donation. Here, you sell the house at a price below the market value. Just as with anticipatory succession, there’s an obligation to compensate any other siblings in the case of a donation (or mixed donation).

In addition, a gift tax may apply in a few cantons. However, only the difference between the market value of the house and the purchase price is taxed. In most cantons, donations to children are tax-free.

Donating during your lifetime does not prevent the house being used to finance a stay at a nursing home should you need care. After your death, your legal heirs must pay back all supplementary benefits from the estate that have accrued over the preceding ten years and which exceed the tax-free amount of CHF 40,000.

Avoid financial dependency

Beware: If you want to transfer your home without consideration, whether through anticipatory succession or donation, you should still have sufficient financial resources to cover your needs during retirement. If not, you risk becoming financially dependent on your children. Should you intend to continue living in the house, you should record the right of residence or usufruct in a contract.

Tip: Transferring property is a complex matter. You should therefore definitely seek advice from a specialist.

Gerhard Buri is a Migros Bank customer advisor and pensions expert