Can a Primary Residence Be Converted into a Second Home?

The general rule

In Switzerland, a property's classification as primary or secondary residence is tied to the owner's registered domicile. If an owner moves their domicile away from a property — registering their primary residence elsewhere — the property automatically becomes a secondary residence.

This change of classification is generally permitted for existing properties. Lex Weber does not prevent an existing primary residence from becoming a secondary residence when the owner moves away. The law restricts new construction of secondary residences, not the reclassification of existing ones.

Implications in Lex Weber-restricted municipalities

In a restricted municipality like Montreux, converting a primary residence to a secondary residence is permitted for existing properties. However, the reverse — converting a secondary residence back to a primary residence — is also permitted and does not require special authorisation (the owner simply registers their domicile at the property).

The key restriction is that a property that has been converted from primary to secondary residence cannot be converted back to primary residence and then sold as a primary residence to circumvent Lex Weber. The law includes anti-circumvention provisions to prevent this.

Practical scenarios

A common scenario is an owner who purchased a primary residence in Montreux while working in Switzerland, and who later moves abroad. The property becomes a secondary residence when the owner deregisters their Swiss domicile. The owner can retain the property as a secondary residence, rent it out (subject to tenancy law), or sell it.

Another scenario is an owner who inherits a primary residence in Montreux but lives elsewhere. The inherited property becomes a secondary residence in their hands. They can use it as a holiday home, rent it out or sell it.

Tax implications of reclassification

Reclassifying a property from primary to secondary residence has tax consequences. The owner's tax domicile changes, and the property becomes subject to property tax in Montreux rather than income and wealth tax at the primary domicile. The imputed rental value (valeur locative) calculation may also change.

Owners considering reclassification should consult a Swiss tax adviser to understand the full tax implications before making the change.

Key points

• A property becomes a secondary residence when the owner moves their domicile elsewhere
• Reclassification from primary to secondary is permitted for existing properties
• Lex Weber restricts new construction, not reclassification of existing properties
• Anti-circumvention provisions prevent abuse of the reclassification rules
• Tax implications of reclassification should be assessed before making the change