Real Estate Sale: Notarization in 2026, transfer of ownership or transfer of title and risk in 2027—when are taxes due?

When selling real estate, it is often assumed that taxable profit is recognized only when ownership—or the transfer of risks and benefits—passes to the buyer. However, as the following scenario illustrates, there are several factors to consider when selling real estate around the turn of the year.

Facts: The purchase agreement will be notarized at the end of 2026, while the actual closing—that is, the transfer of ownership—will not take place until the following year, 2027. This creates a time lag between notarization and the transfer of ownership, or the transfer of benefits and risks. This raises the question of how this should be treated for tax purposes—that is, when the contract is deemed to have “taken effect” from a tax perspective.

If a purchase agreement is legally concluded before the end of the year, the payment of the purchase price, the transfer of benefits and risks, and the transfer of ownership in the land register may not take place until the following year. From an economic perspective, it might therefore seem reasonable to assume that the capital gain will also be realized later. For tax purposes, however, the date of transfer of ownership is decisive, particularly for real estate gains tax, whereas for other types of taxes—such as federal direct tax or income or profit tax on business assets—the transfer of ownership is not necessarily the determining factor.This distinction in timing is particularly important in the case of larger real estate sales, as an earlier realization of gains can also lead to a correspondingly earlier tax liability.

Under the so-called “target” method, income is generally considered realized for tax purposes when a fixed legal claim to it has arisen and the income can actually be disposed of. The timing of subsequent fulfillment is generally irrelevant. If, however, the fulfillment of the claim is particularly uncertain, the tax realization may be deferred accordingly. For the sale of commercial real estate, this principle has been clarified to the effect that the legally valid conclusion of the notarized purchase agreement may already be the decisive point in time, provided that the fulfillment of the contract does not appear to be particularly uncertain. A subsequent transfer of ownership therefore does not automatically result in the deferral of taxation to the following year.

The Federal Supreme Court confirmed this practice, among other things, in its decision 2C_835/2013 of December 16, 2014, based on a case from the dualist canton of Aargau involving a legal entity. In this specific case, the purchase agreement was notarized on November 26, 2008, while possession and risk of loss passed on January 1, 2009, and title did not pass until January 5, 2009. Nevertheless, the capital gain was recognized for tax purposes as early as the 2008 fiscal year, even though it was not recorded in the financial statements under commercial law until 2009. The Federal Supreme Court found no particular uncertainties regarding the performance of the contract. In doing so, it took into account, in particular, the short period of time between the conclusion of the contract and the transfer of ownership, as well as an unconditional promise to pay, which effectively ruled out the risk of default. Under these circumstances, neither the subsequent taking of possession nor the transfer of risk was decisive for the tax realization date.

In practice, however, this does not mean that every real estate sale notarized in December must necessarily be taxed in the old year. The decisive factors are the specific circumstances and, in particular, whether a sufficiently established claim to the consideration already arose upon the conclusion of the contract or whether the performance of the contract still appears to be particularly uncertain. Especially for real estate transactions taking place around the turn of the year, the tax realization date should therefore be examined as early as the drafting of the contract and not only upon its subsequent execution.

The practical message for cantons with a dualistic property gains tax system is clear: notarization and the transfer of ownership may occur in different fiscal years, without the transfer of ownership automatically determining the tax realization date. The tax realization date must therefore be assessed based on the specific circumstances of each individual case.

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