Renovation Fund for Condominium Ownership: How Much Is Enough?

Short answer: A renovation fund is not required by law in Switzerland. In practice, however, a rule of thumb has become established – most notably the recommendation from the SSTV (Schweizerischer Stockwerkeigentümerverband, the Swiss condominium owners' association) of at least 0.4% of the building insurance value per year, until a target size of 6 to 8% is reached. Other expert sources work with different ranges – there is no single, unified standard.

Rules of thumb at a glance: no single standard

Anyone looking for "the" correct amount for a renovation fund will be disappointed: several figures circulate, depending on the source.

• SSTV (Schweizerischer Stockwerkeigentümerverband): at least 0.4% of the building insurance value (BIV) per year, as long as the fund is below 6% of the BIV.
• Another expert source: 0.2–0.5% of the BIV per year is considered "typical"; up to 1% is also cited as a "safe option." At a contribution of 0.3% per year, the 6% mark is reached mathematically after roughly 20 years (including compound interest).
• Yet another expert source: cites markedly higher figures of 0.8–1.2% of the BIV per year – depending on the building's age, construction quality, and planned renovations.

The "0.4% rule" is therefore real and comes from the SSTV, but it is not the only figure circulating in practice. Credible sources together span a corridor of 0.2% to 1.2% of the building insurance value per year. Which figure fits a particular case depends on the age of the property, the condition of the building fabric, and any renovations already on the horizon – a newly built STWEG tends to need less, while a 40-year-old property with an upcoming façade or roof renovation tends to need more.

An intuitive way to picture the percentage: anyone who contributes 1% of the building insurance value per year (1% × 100 years = 100%) would, mathematically, have saved the sum for a complete renewal of the entire building value after 100 years. The SSTV's 0.4% rule therefore corresponds to an implicit cycle of roughly 250 years, while the higher range of 0.8–1.2% corresponds to a markedly shorter cycle of 83 to 125 years. No building is ever actually renewed in its entirety on a single rhythm – roof, façade, and heating each have different life cycles – but the percentage can be read this way as an average, implicit renovation cycle rather than an abstract figure.

Target size: when is the fund big enough?

Recommendations for the target size also differ slightly, but they move within a similar range:

• The SSTV cites 6% of the BIV as the target size, above which annual contributions can be reduced.
• Other sources place the long-term target corridor at 6–8%, with typical upper limits of 5–10% of the BIV.

There is no fixed legal timeframe for this. Mathematically, however, an annual contribution of 0.3–0.4% of the BIV produces a horizon of roughly 15 to 20 years until the target size is reached – a period that roughly coincides with the rhythm of major renovation cycles (roof, façade, heating).

Legal requirement vs. practical recommendation

Clarity matters here, because conversations with owners' associations often leave the impression that a renovation fund is mandatory: it is not. The Swiss Civil Code (Art. 712a et seqq. ZGB) does not require STWEG communities to maintain a renovation fund.

The revision currently underway to condominium ownership law does not fundamentally change this either: it does not provide for a general obligation to build up a fund. It merely envisages that individual owners will, in future, have the right to petition a court to establish or amend a renovation fund if the association refuses to do so (Art. 712h^bis of the preliminary draft ZGB).

In practice, the vast majority of associations build up a fund anyway – not because it is required, but because without a reserve, major renovations lead to unpleasant special assessments that can financially overwhelm individual owners.

Worked example

As an example of how the SSTV rule of thumb plays out in practice: for a building insurance value of CHF 3 million, an annual contribution of 0.4% produces a total contribution from the association of CHF 12,000 per year. Divided among, say, 6 units (regardless of value quotas, purely as an average) that works out to roughly CHF 2,000 per unit per year.

In reality, the amount per unit is not distributed evenly, but according to value quota – this example is intended only to illustrate the order of magnitude.

Tax treatment in the Canton of Bern

Contributions to the renovation fund are not automatically tax-deductible in the Canton of Bern. For the deduction to be possible, three conditions must be met:

• It must be a genuine STWEG community – not simple co-ownership or joint ownership.
• The funds must be held in a separate bank account belonging to the association, not in an account of individual owners.
• The regulations must ensure that the funds are earmarked for the repair and maintenance of the shared parts of the property.

If the balance is later actually used for maintenance, no second deduction is possible at that point – the deduction already occurs when the money is paid in. The fund balance must also be declared proportionally as assets, and any interest earned on it as income.

One point worth watching: with the planned overhaul of home-ownership taxation (abolition of the imputed rental value), deductibility for owner-occupied property could change in the future. This question is still under revision, and a definitive rule is not yet in place.

Frequently asked questions

Conclusion

A renovation fund is not a legal requirement, but it is standard practice in almost every STWEG. There is no single "correct" figure – the SSTV rule of thumb of 0.4% per year up to a target size of 6% is the best-known point of reference, while other expert sources set the bar lower or markedly higher depending on the condition of the building. More important than the exact percentage is that the association pursues a deliberate savings strategy at all – tailored to the age, condition, and anticipated renovations of the property.

All figures and legal references in this article are disclosed and linked → Sources.