At its meeting on 16 August 2017, the Federal Council sent a total revision of the Ordinance on Real Estate Costs for consultation. This is intended to clarify the tax measures in the building sector provided for in the new Energy Act. The entry into force is planned for 1 January 2020.
The Energy Act adopted in the vote of 21 May 2017 provides for the tax deductibility of the dismantling costs for replacement construction and the transferability of the energy-related investment and dismantling costs to several tax periods. These new deductions will now be clarified in the context of the planned total revision of the Property Cost Ordinance - now known as the Property Cost Ordinance.
According to the draft of the Land Costs Ordinance, tax-deductible demolition costs include the costs of dismantling installations, demolition, removal and disposal of construction waste. In particular, non-deductible costs include the costs of remediation of contaminated soil and of site relocation, clearing, levelling work and excavation work beyond deconstruction with a view to replacement construction.
The deconstruction costs can only be claimed for tax purposes if a replacement new building is erected within a reasonable period of time on the same property as the previous building and if this building has a similar use.
In each tax period, the taxpayer can choose between deduction of actual costs and a flat-rate deduction. The effective energy-related investment and dismantling costs can be spread over a maximum of three consecutive tax periods. The first carryover assumes that the aforementioned expenses cannot be fully taken into account for tax purposes in the year in which they were incurred.
The consultation period for the totally revised regulation runs until 16 November 2017.
The corresponding press release of the Federal Department of Finance (FDF) and other documents are available here.
