15.09.2023
In the past most, people lived according to the same model and the distribution of roles was clear: many couples sought to buy their own home after getting married. While the man went to work to bring in the money, the wife looked after the children and the home. Nowadays not all couples decide to have children, some people live with partners and owning their own home is no longer top priority for some people. It’s also not a worthwhile option for everyone. Which life model is in line with your expectations – and level of income?
We can count ourselves lucky that we live in the 21st century and can choose how we live. Living as partners is common in Switzerland and many mothers and fathers share childcare duties. However a number of questions arise concerning income, tax, rent and the purchase of property.
There are tough decisions to make: is it worth getting married if you then have to pay more tax as man and wife? Are you better off with rented accommodation than owning your own home with mortgage interest putting strain on the household budget? Having children means sacrificing certain freedoms. And can you actually afford to have children? We all inevitably face these questions – usually between the age of 30 and 40. What’s known as the quarter-life crisis is an apt description as we make many decisions during this period that shape the course of the rest of our lives.
As regards the ideal way of living, we are perhaps subject to more social pressure than we would like. There are also financial and legal issues to consider. Couples who decide against marriage must be well protected contractually, for example. Otherwise they risk not obtaining the rights and money to which they are entitled in the event of their partner falling ill or passing away.
Getting married is usually also disadvantageous from a tax perspective. Instead of two incomes, the salaries of both spouses are entered as one income on the tax return. In a few cantons, but above all with direct federal tax, this has implications. This is because it puts married couples into a new tax bracket. More tax is paid on the new, higher taxable income proportionally than on the two low incomes. While the legal provision known as the “marriage penalty” is controversial, it is also something that has to be faced. Couples thinking about getting married should consider how they intend to finance this increased tax liability over the long-term. Discuss this issue with your partner as well as everything else. And work out a budget so that you don’t get an unpleasant surprise or even fall into debt.
When the time comes to plan a family, at the latest, you should consider the advantages and disadvantages of a marriage or partnership. Most legal aspects relating to paternity, inheritance, social welfare and widow’s and orphan’s pension can be governed contractually. It is vitally important that unmarried couples conclude a partnership contract as, in contrast to marriage, there are no benefits provided for by law to protect the financially weaker party when living in a partnership. They have no entitlement to a share of the assets or compensation for looking after the family – even if the relationship has lasted many years.
As unromantic as it may sound, deciding on a particular way of living is generally rarely an arbitrary decision based on gut instinct. Money often plays a major role. According to the The link will open in a new window Swiss Federal Statistical Office, children are very expensive from a purely financial perspective: parents spend almost CHF 180,000 on a child on average up to the age of 18 – this figure can be much higher depending on their educational path. The first child in particular sees a significant rise in monthly outgoings. These costs must be included in your budget.
Deciding whether to buy your own home also has to be weighed up carefully. Owning their own home is many Swiss people’s dream. But only few fulfil it. Buying your own home – whether it’s a house or apartment – means putting down a deposit of 20% of the purchase price to secure a mortgage from the bank. This mortgage must then be paid off with monthly interest. If you only put down the minimum of 20%, you usually have to pay higher monthly interest than you would if renting accommodation. This can put a lot of strain on the budget.
The fact that property in a good location is expensive but may also gain in value must be taken into account too. In municipalities where prices are low, you are in a favourable position when buying your own home but it may not be so easy to sell. Buying property in the major Swiss cities is often difficult. Renting an apartment is often cheaper than paying a mortgage on your own home. Rented accommodation is a better option if you are looking for security, as mortgage interest rates can fluctuate. Owners also currently have a greater tax liability (than tenants) due to the rental value of owner-occupied property.
