Application of the absolute method in the case of partial reinvestment of real estate gains

Facts

X. acquired an apartment in the municipality of Y. in Zurich in September 2001 and sold her previously owner-occupied property in the city of Uster for CHF 1,165,000 the following month. The Real Estate Tax Commission of the City of Uster determined a gain of CHF 214,300 and demanded a real estate gains tax of CHF 53,335 from X. The Tax Appeal Commission of the Canton of Zurich reduced the real estate gains tax to CHF 12,475.05. Upon appeal by the City of Uster, the Administrative Court of the Canton of Zurich set the real estate gains tax owed by X. back to CHF 53,335. X. then filed an administrative court appeal with the Federal Supreme Court.

Considerations

The Federal Supreme Court dismisses the administrative court appeal. It finds that the wording of Art. 12 para. 3 lit. e DFTA does not yet allow any conclusion to be drawn about the application of a specific method for determining the tax amount to be deferred in the case of partial reinvestment of the proceeds in a replacement property. However, the cantons cannot be left to decide how they want to determine the tax deferral in such cases, as the federal legislator is seeking to harmonize this with Art. 12 DFTA.

The Federal Supreme Court concludes that only the absolute method applied by the Administrative Court is compatible with the purpose and intent of…