How do I declare this flat?
How do I declare this flat?
"We are making a 2-room flat available free of charge to our 26-year-old daughter, who is completing her studies in early music. Our daughter's annual income is around CHF 20,000. How should this flat be declared, and who should declare the rental value? The owner or the person who actually occupies the flat?
Jean-Claude, Geneva
The tax authorities consider that the taxpayer who owns the flat he occupies gains an economic advantage by saving the rent he would have had to pay as a tenant. This income, known as the rental value, corresponds to the use value of the property calculated at market price.
According to the Geneva Law on public contributions, the person liable to pay tax on rental value is the person registered as the owner or usufructuary in the land register on 31 December of the tax period. The concept of occupation by the owner is a so-called fiscal concept. Therefore, if a third party actually resides in the building belonging to the taxpayer without paying rent, the tax authorities consider that the owner reserves the use of the building and remains the occupant for tax law purposes. The same applies if the owner does not actually reside in the building, which would remain uninhabited.
To calculate the rental value, the property used will be compared to other rented properties with similar characteristics. All the relevant information and documents, including the "Questionnaire for determining rental value", are available at www.ge.ch/impôts. The questionnaire, which can be completed directly online, should be attached to your tax return. The guide to the 2009-2012 Rental Value Questionnaire, available on the aforementioned website, will help you to complete it correctly.
So, even if your daughter lives alone in the flat of which you are the registered owner, you remain the sole tax payer. As a result, the rental value of your flat will be added to your taxable income. If, on the other hand, you grant your daughter a usufruct over your property, i.e. the right to use the property and receive the proceeds, she will become the tax debtor.
