Credit vs Cash Payment

Hello everyone

Can someone independent tell me exactly what would be better for me:

I have the option to convert 2 floors of a farmhouse to live in. I want to do a lot of the work myself. I would have around 80,000 francs for the conversion.

What makes more sense now:
a) mortgage/loan (because of tax savings)
b) pay myself

Actually, I am the kind of person who prefers to pay for everything he owns. I also have the money saved. But a colleague said that I might be better off tax-wise if I finance part of it through a mortgage/loan...

Thanks for your tips!

Whether you benefit more from a loan through the tax savings cannot be said in general. It also depends on the interest rates your bank charges. Basically, you not only pay interest but also interest on the interest. It really is just a matter of calculation. However, I would recommend doing a loan comparison beforehand and then bothering a tax advisor with the concrete numbers. :)

Regards
Markus

So for us, a loan would not have been worthwhile; we would have been worse off than with cash payment, but I also think such things vary individually.

I also think it would be better to first obtain possible loan offers and then sit down with your tax advisor to discuss the further course of action.

That depends on the tax options; in Germany, this is only still worthwhile for the rental sector.

Right, tax opportunities are one thing, but don’t forget to apply for government grants. This can save a lot of money with both options.

Helin