Deduct interest on debt from tax?
The debt interest paid over the year can be deducted from taxable income by private individuals. This applies to both cantonal income tax and federal tax, with an allowance of 50,000 Swiss francs. The interest may be deducted from the private assets up to the amount of the gross income. This regulation also relates to the interest on debt that accrues from a personal loan or is payable for it. The allowance is usually sufficient to fully deduct the interest.
The deduction of debt interest is actually worth it! If, for example, a personal loan of CHF 30,000 was taken out, which runs for 36 months, the interest can add up to around CHF 2,000 in the first year. If the tax rate is ten percent, tax savings of CHF 200 may be possible.
What can be claimed?
As a borrower, you not only transfer the interest to the lender's account, but also the repayment rate plus the interest. The interest on the debt is deductible, but the portion of the repayment is not. This means that you can only apply part of the interest on your tax return and nothing beyond that. This reduces the deductible portion each year because interest is always calculated on the remaining loan amount. However, the repayment share increases. If you compare the possible deductible amounts shortly before the end of the loan repayment and at the start of the repayment, you will also see considerable differences in the amount of the deduction amounts.
Interest is deducted as follows:
- In January you will receive a certificate from the lender of the amount of the interest payments made.
- You enter the details of the deductible interest on the debt and the outstanding debt in the corresponding form for the? Private debt? on.
- You transfer the sum of all debt interest from personal loans into the main form.
- You attach a copy of the individual certificates of interest to the tax return.
If you do not automatically receive a certificate of the interest you have paid, you can also request it directly from the lender.
Deductible also for private loans
If a personal loan is used by relatives or friends, interest can of course also be agreed on the loan amount. These are deductible, although the deductibility even applies to other forms of credit (for example, debts from credit card payments). Important: You must not claim leasing transactions for tax purposes, because leasing is legally seen as a rent and not as a loan. If you are planning a new purchase like a car, you should therefore use the loan as a financing option as a lease.
Tip: Include copies of the private loan agreement and receipts from the bank on the payments made, as you will not receive a current interest certificate for private loans.
As a summary, it can be stated
Debt interest on private loans is deductible and can reduce taxes.
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