Facts

The appellants, A. and [B.X.] , sold a 3 1/2- and a 4 1/2-room condominium as well as two double parking spaces in Nuolen (SZ) on December 27, 2001, for a total price of CHF 1,300,000.--. The purchase price was settled by taking over the mortgage debt of CHF 700,000.-- from the Schwyzer Kantonalbank and by granting a right of residence in the two sold condominium units and a right of use for the double parking spaces at an imputed value of CHF 600,000.-- in favor of A. and [B.X.] .

On November 18, 2003, A. and [B.X.] were definitively assessed by the Cantonal Tax Administration of Schwyz for cantonal taxes and direct federal tax for the tax period 2002. Compared to the self-declaration, an offset for right of residence/usufruct in the amount of CHF 24,968.-- was made.

The appeal against this assessment was rejected by the Cantonal Tax Commission/Administration for direct federal tax Schwyz with regard to the aforementioned offset by decision of June 8, 2009. The appellants appealed against the appeal decision to the Administrative Court of the Canton of Schwyz, which partially upheld the appeal insofar as it allowed the building insurance costs to be deducted from taxable income and referred the matter back to the lower instance for determination of the insurance costs and subsequent re-determination of taxable income.

Considerations

The Federal Court examines its jurisdiction or the admissibility of the legal remedies filed with it ex officio and with free cognition. The appellants did not specify the legal remedy in their submission, but stated that they were also filing a constitutional complaint. According to Art. 82 ff. FSCA in conjunction with Art. 146 DFTA and Art. 73 of the Federal Act of December 14, 1990, on the Harmonization of Direct Taxes of Cantons and Communes (DTHA; SR 642.14), both in the version according to Annex No. 57 and 58 of the Federal Act of June 17, 2005, on the Federal Administrative Court (FACA; SR 173.32), an appeal in public law matters is available against the contested decision.

The Federal Court has already dealt with the tax consequences of a property transfer with simultaneous establishment of a right of use on the transferred property in favor of the transferor on several occasions. It has consistently held that when a property is…