Reconstruction and renovation spread over several years
My wife and I have 3a and vested benefits accounts with around CHF 170,000 at their disposal. We would like to use it to carry out renovation work. How do we make the best use of our accounts?
It is indeed possible to withdraw 3a and vested benefits not only to finance home ownership, but also for certain conversions and renovation work. For tax reasons, however, this should be done in two to three steps, because capital benefits from old-age provision are taxed together within the same tax period and thus at a higher progressive rate. For tax reasons, you should also stagger the conversion and renovation work over two tax periods, at least if the amounts involved are substantial. In both years you can deduct the effective costs instead of the flat rate, which breaks your tax progression in both years. A tax-efficient solution could therefore be to finance the conversion from pillar 3a as a first step and later the renovation from vested benefits.