Heirs' Rights over Real Estate

Heirs' Rights over Real Estate in Switzerland

Succession involving real estate in Switzerland is a complex legal field where inheritance law, land law and taxation intersect. When a property owner dies, their real estate enters their estate and is transmitted according to precise rules established by the Swiss Civil Code. This transmission raises many practical questions for heirs: who inherits the properties? How is division effected? What options are available? What tax burdens apply? Our law firm regularly accompanies families facing these questions, providing guidance on the rights and obligations of heirs regarding the deceased's real estate, while taking into account the cantonal specificities that characterise the Swiss legal system.

Legal Foundations of Real Estate Succession in Switzerland

In Switzerland, the transmission of real estate upon death takes place within the general framework of inheritance law, primarily governed by arts. 457 to 640 of the Swiss Civil Code (SCC). This body of legislation establishes a mixed system combining legal succession and testamentary freedom.

The fundamental principle of Swiss inheritance law stipulates that heirs acquire the entire estate from the moment of death. This rule, set out in art. 560 SCC, implies that real estate is automatically transferred to the heirs without the need for a formal transfer instrument. However, registration in the land register remains necessary to make this transfer enforceable against third parties.

Swiss law recognises two categories of heirs:

• Forced heirs, who benefit from legal protection guaranteeing them a minimum share of the estate (the forced share)
• Instituted heirs, designated by the deceased in a will or succession pact

Forced shares are calculated as follows:

• For descendants: 1/2 of their legal hereditary share (since 2023)
• For the surviving spouse: 1/2 of their legal hereditary share
• For parents: no longer a forced share since 2023

The freely disposable portion represents the part of the estate that the deceased may freely dispose of. It varies according to the deceased's family composition.

In matters of real estate specifically, Swiss law provides certain particularities. For example, art. 612a SCC gives the surviving spouse the possibility of requesting the allocation of the family home at the time of division, provided they demonstrate a preponderant interest.

The legislation also recognises the principle of joint hereditary ownership: until the division, the heirs become co-owners of the real estate and must manage this estate collectively, which can give rise to complex situations requiring the intervention of a specialist lawyer.

Methods of Dividing Real Estate among Heirs

The division of real estate is often the most delicate aspect of an estate in Switzerland. Several options are available to heirs to proceed with this distribution.

Preferential Attribution

The Swiss Civil Code provides mechanisms for preferential attribution allowing certain assets to be allocated to a specific heir. These provisions aim in particular to preserve the economic integrity of certain assets or to respect particular emotional ties.

In real estate matters, preferential attribution may concern:

• The family home, which may be allocated to the surviving spouse (art. 612a SCC)
• An agricultural holding, which may be allocated to a descendant wishing to operate it personally (Federal Act on Rural Land Law)
• Real estate used professionally by one of the heirs

The heir benefiting from preferential attribution generally must pay a balancing payment (soulte) to the other heirs to compensate for the excess value they receive.

Sale and Division of Proceeds

When allocation to a single heir is not desired or possible, sale of the property to a third party with division of the proceeds among the heirs is a frequently adopted solution. This option has the advantage of simplicity and allows equitable distribution in cash.

The sale may be carried out:

• By private treaty, if all heirs agree on the terms
• At public auction, if there is persistent disagreement

In certain cases, the court may order a public auction when division in kind proves impossible or prejudicial to the value of the property.

Co-ownership or Common Ownership

Heirs may choose to maintain joint ownership by legally organising their relationship to the property. Two main forms exist:

• Ordinary co-ownership (arts. 646 et seq. SCC): each heir holds a precise share of the property
• Common ownership (arts. 652 et seq. SCC): heirs hold the property together without defined shares

These solutions generally require the establishment of a use agreement or co-ownership convention setting out the rights and obligations of each party, particularly regarding the use, maintenance and charges of the property.

Our law firm regularly intervenes to draft these conventions and prevent potential disputes between co-heirs, ensuring that each party's interests are preserved in a balanced manner.

Forced Shares under Swiss Law (since 2023)

Tax Aspects of Real Estate Succession

Taxation is a decisive aspect of real estate succession in Switzerland. Its impact varies considerably depending on the canton, each having its own inheritance tax legislation.

Inheritance Taxes

In Switzerland, inheritance taxes fall within cantonal competence, which creates significant territorial disparities:

• The competent canton is generally that of the deceased's last domicile for movable assets, and that where the property is located for real estate
• Tax rates vary according to the degree of kinship between the deceased and the heir
• Many cantons fully exempt the surviving spouse and direct descendants
• Certain cantons (such as Schwyz) apply no inheritance tax at all

Real Estate Capital Gains Tax

Upon succession, the real estate transfer is not subject to real estate capital gains tax. However, this tax becomes payable if the heirs subsequently sell the inherited property. In this case:

• The period of ownership taken into account generally includes that of the deceased (carry-over of the acquisition date)
• The acquisition price considered is that initially paid by the deceased
• Deductions are possible for value-adding expenditure made by both the deceased and the heirs

Tax rates generally decrease with the period of ownership, providing an incentive to hold assets over the long term.

Protection of Heirs' Rights and Dispute Resolution

The transmission of a real estate estate can give rise to family tensions and legal challenges. Swiss law provides various mechanisms to protect heirs' rights and resolve disputes.

Succession Actions

Heirs have several judicial remedies to defend their rights:

• Action for division (art. 604 SCC): allows any heir to demand at any time that the estate be divided
• Reduction action (art. 522 SCC): aims to protect the forced share against excessive liberalities
• Petitory action (art. 598 SCC): allows the heir to claim estate assets held by third parties
• Action to challenge a will: based on formal or consent defects

These actions are subject to strict limitation periods, generally one year from knowledge of the cause of action, and at most ten years after the death or the opening of the will.

Interim Measures

Where there is a risk to heirs' interests, interim measures may be requested:

• Estate inventory: establishes the exact composition of the estate
• Official administration: entrusts estate management to a third party
• Sealing: prevents access to estate assets

Frequently Asked Questions about Heirs' Rights