Property Transactions: Even the right to purchase, the right of first refusal, and a long-term lease do not make you the owner!

In its decision 9C_68/2026 dated July 28, 2026, the Federal Supreme Court further clarified the requirements for a change in economic ownership of real property. The decision is particularly relevant for long-term real estate transactions in which a subsequent purchaser already has a right of purchase or a right of first refusal prior to the transfer of ownership, uses the property, or even makes significant investments in it at their own expense.

In this specific case, the eventual purchaser had been renting part of the property since 1994. At the same time, he was granted a limited right of first refusal as well as a right to purchase that could be exercised at a later date and was transferable and inheritable. He also organized and financed extensive renovation work, dealt with authorities, architects, and contractors largely on his own, and claimed value-enhancing investments of approximately CHF 689,000 for the period prior to acquiring ownership. He exercised the right to purchase in 2001; the entry in the land register was made in 2003. In 2021, he sold the property for CHF 7.05 million.

For the purposes of property gains tax, the decisive factor was therefore when his tax-relevant period of ownership had begun. The taxpayer argued that the combination of the lease agreement, the right of first refusal, the right to purchase, and his de facto “project control” had already granted him a status similar to that of an owner as of 1994. An economic transfer of ownership at that earlier point in time would not only have extended the period of ownership but also made it possible to claim the investments made prior to the acquisition under civil law as expenses for the subsequent real estate gains tax.

The Federal Supreme Court clearly rejected this view. Under Art. 12(2)(a) of the Federal Act on the Harmonization of Property Transfer Tax (StHG), a transfer of economic ownership must be interpreted restrictively. It is required that the essential elements of the power of disposal associated with the real property be comprehensively transferred to the acquirer, leaving only the land registry entry as the external indicator of ownership. A right of purchase generally constitutes only the basis for a subsequent acquisition of ownership. Even a lease agreement—even when combined with a right of first refusal, extensive de facto rights of use, and significant investment activity—is not sufficient for this purpose as long as key powers of ownership remain with the previous owner. In particular, the subsequent purchaser was unable to sell, gift, or encumber the property to any significant extent.

In addition, the Federal Supreme Court ruled that value-enhancing investments made prior to the acquisition of ownership under civil law cannot be considered as expenses for the purposes of the subsequent real estate gains tax. The Federal Supreme Court noted that such investments fall outside the relevant period of ownership. This was not altered by the fact that the subsequent buyer had borne the costs himself and apparently received no corresponding compensation from the former owner. Nor did the principle of congruence lead to a different result.

The ruling confirms that the mere granting of a right to purchase does not in itself constitute a change of ownership for economic purposes. However, its significance extends beyond transaction practice. Anyone who can or wishes to acquire real estate under civil law only at a later date should take into account the tax implications of significant investments made before the transfer of ownership. If project development, renovations, or other value-enhancing work is carried out during an earlier phase of a lease or right-of-purchase arrangement, there is a risk that these costs will no longer be deductible for real estate gains tax purposes in the event of a subsequent sale.

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