Geneva spares its wealthy taxpayers
Mid-June saw the Geneva electorate vote on a series of tax measures impacting the region's luxury real estate market. While the proposal to introduce a solidarity contribution on large fortunes was rejected, a revision of property taxation was accepted, offering advantages to longstanding owners.
Solidarity contribution rejected
The initiative launched by the left and the unions aimed to temporarily impose a solidarity contribution on fortunes of over 3 million francs. However, it was rejected by 55.12% of the Geneva population. Supporters of the proposal hoped to alleviate economic inequalities and strengthen social solidarity. Nevertheless, the fears expressed by the right about the flight of wealthy individuals were decisive in the outcome of the vote.
Revision of property taxation
At the same time, a revision of real estate taxation was approved by 52.04% of voters. This reform was necessary in order to comply with federal law, which requires that the tax valuation of real estate be brought closer to its market value. Until now, the canton of Geneva had been slow to make this adjustment, resulting in tax values that were lower than they actually were. The revision proposes a provisional solution by linearly increasing current tax values by 12%, with annual indexation limited to 1% to compensate for inflation. At the same time, wealth tax will be reduced by 15%. This reform will reduce tax revenues for the canton by CHF 86 million.
Debate and controversy
The left opposed the law, arguing that it would perpetuate an illegal situation, as most properties would remain undervalued. Geneva's Conseil d'Etat also shared these concerns, pointing out the inequality of treatment between owners. Owners who acquired their property a long time ago will continue to benefit from undervaluation, while new owners will not have this advantage. The canton's treasurer, Nathalie Fontanet, explained that the Conseil d'Etat had opposed this reform on the grounds that it did not comply with certain aspects of federal law, and she anticipates that appeals will be lodged against the law.
Consequences for the luxury real estate market
The ballot decision was welcomed by the Geneva Real Estate Chamber, as it would put an end to the cumulative rate of 1.1% (additional real estate tax and wealth tax) for homeowners. These tax measures will have an impact on the luxury real estate market in Geneva. Owners who have held properties for a long time will benefit from an increased valuation of their properties, while newcomers will face more realistic valuations. It should be emphasized that this reform may influence buying and selling decisions in this segment of the real estate market. In any case, it should not be forgotten that wealthy buyers are primarily motivated by emotional aspects. Their purchases are often based on love at first sight!
Editor: Emmanuel Grandjean - July 2023
