Selling a house – repaying advance withdrawal

If you want to sell your house, you should consider the fact that any early withdrawal of pension fund assets must be repaid. But when exactly is that and why? And how does a repayment work? Find out in this article.

Times change, and sometimes life takes unexpected turns. One day you find that your own house or apartment no longer suits your current situation. Selling it is the obvious solution. But if you withdrew pension fund assets early at the time of purchase, you must now repay them to the pension fund.  However, there are a few exceptions.

Why do I have to repay the advance withdrawal?

You must repay the early withdrawal when you sell your home because your retirement savings are intended to secure your retirement – regardless of whether they are held in your pension fund or tied up in your home. If you take an early withdrawal from your pension fund as part of the promotion of home ownership scheme, a so-called “restriction on sale” is therefore recorded in the land registry. This means that if you sell your property at a later date, you must repay the early withdrawal to the pension fund. In this way, the legislature aims to prevent you from ending up without a home and without a pension fund.

When is repayment compulsory? 

You are obligated to repay your pension capital as soon as the conditions for the advance withdrawal are no longer met. This applies not only when you sell your home, but also when you change its use: Perhaps you no longer wish to live in your house or apartment yourself, but instead want to rent it out.

But there are also exceptions. In these cases, there is no obligation to repay: 

• Reinvestment in residential property: You use the proceeds from the sale of your property within two years to buy another owner-occupied home.
• Temporary and involuntary change of use: It is not possible for you to use your property yourself for a certain period of time. For example, for health reasons or because your job requires a temporary move.
• Retirement, disability or death: Once you retire, no repayment is required. The same applies if you become disabled or die. 
• Cash payment: If you withdrew your vested benefits in cash when you left the pension fund (possible starting at age 58), no repayment is required.

Can I also repay pension fund assets voluntarily? 

Yes, as long as no benefit case has yet occurred (reaching reference age, disability, or death), you can repay the lump sum you withdrew. However, a minimum amount of CHF 10,000 applies. If the remaining balance is smaller, everything must be repaid at once. The biggest advantage of repayment is, of course, that the insured benefits are increased accordingly.

How will the refund affect my taxes?

The taxes paid on the advance withdrawal will be refunded. To arrange for the tax refund, you must first submit a written request to the canton's tax authority. The latter will inform you to which cantonal authority the following documents must be submitted:

1. Confirmation of repayments made (issued by the occupational benefits institution)
2. Confirmation of pension capital still invested in residential property (available from the Swiss Federal Tax Administration)
3. Confirmation of federal, cantonal and municipal taxes paid on the advance withdrawal (available from the Swiss Federal Tax Administration)

No interest is payable on the repayment, and the repayment cannot be deducted from taxable income.