Homeowners currently pay income tax on the imputed rental value of their homes. But that could soon change: in September 2025, the Swiss electorate will vote on the introduction of a property tax. If the draft bill is accepted, it would lead to the abolition of the imputed rental value. We have summarised the most important facts about imputed rental value.
The abolition of the imputed rental value has been under discussion for more than 20 years. There is widespread support for the idea of overhauling the income tax on the imputed rental value of residential property. For a long time, however, it was unclear how this change would actually be implemented. Parliament has now passed a draft bill, which will be voted on in a referendum in the autumn.
What is the imputed rental value?
The imputed rental value is a fictitious rental price for owner-occupied properties. It is based on the assumed revenue that would be generated if the property were not occupied by the owner but rented or leased to another party. This notional revenue is subject to income tax and must be declared in the owner’s tax return. Homeowners therefore pay additional income tax on the imputed rental value. In return, mortgage interest and maintenance costs can be deducted from taxable income, thus reducing income tax.
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How is the imputed rental value calculated?
The imputed rental value is 60–70% of the amount that a tenant would have to pay to rent a comparable property. The imputed rental value is derived from the tax value of the property, which amounts to approximately 70% of the market value. For condominiums, the imputed rental value is around 4.25% of the tax value, while for single-family homes it is approximately 3.5% of this value.
In most cantons, maintenance costs can be deducted from taxable income at a flat rate of 20% of the imputed rental value. If the actual maintenance costs exceed this flat rate, they can be deducted in full – even beyond the imputed rental value.
The following example illustrates the calculation of the tax impact:
The illustration shows that the imputed rental value and the other deductions are influenced by various factors. The imputed rental value depends on the property’s tax value and the imputed rental value rate in the respective canton. In most cantons, maintenance costs are calculated by deducting 20% of the imputed rental value. Alternatively, the actual, proven maintenance costs (e.g. repairs, upkeep) can also be deducted. However, these must be documented with receipts and invoices. The deductions may therefore be higher than the flat-rate deduction if the actual costs are correspondingly high.
If interest rates rise, the mortgage interest payable increases, which can also reduce income tax as more can be deducted from taxable income. The extent to which owners would or would not benefit from abolition of the imputed rental value therefore depends on their individual situation.
The value of a property depends on many factors. More information on how to calculate the value of your property can be found here: Taxes on real estate, gains from real estate, imputed rental value (ch.ch)
What does parliament’s draft bill contain?
The bill provides for a comprehensive system change in the taxation of owner-occupied residential property:
- The imputed rental value would be abolished for first and second homes. Property owners who live in their property themselves would no longer have to pay tax on the imputed rental value.
- It would no longer be possible for homeowners to claim deductions for maintenance or renovation work in their tax return. The same applies to energy-saving and environmental protection measures at federal level. Cantons could continue to permit deductions for energy-saving and environmental measures.
- In future, loan interest will no longer be tax-deductible for owner-occupied residential property. There would be a temporary period in which first-time homeowners can deduct loan interest. In the first year, the deduction would be CHF 10 000 for married couples and CHF 5000 for single people. The deduction would fall to zero on a straight-line basis over 10 years.
What would abolition of the imputed rental value entail?
Abolishing the imputed rental value could have tax advantages for many homeowners, especially those who have low amounts of debt or have already paid off their mortgages.
The abolition could provide an additional incentive to amortise existing mortgages more quickly. In view of the fact that Switzerland has the highest per capita debt rate in the world, it makes sense to reduce this burden from an economic point of view (source: International Monetary Fund).
The change could be disadvantageous for homeowners with properties in need of renovation. After the abolition of the imputed rental value, maintenance costs would no longer be tax-deductible.
Will the imputed rental value be abolished or not?
Whether the imputed rental value will actually be abolished remains to be seen. The draft bill passed by parliament has to be decided on in a popular vote. The popular vote on the introduction of a property tax, which also includes the abolition of the imputed rental value, will take place on 28 September 2025.
There are both supporters and opponents of the reform. Proponents expect the abolition of the imputed rental value to provide important tax relief, especially for people with low levels of debt and first-time homeowners. Opponents, on the other hand, warn of negative consequences, such as a reduction in mortgage volume. In addition, owners of properties in need of renovation could experience disadvantages as they would no longer be able to deduct the maintenance and renovation costs from their taxable income.
What must I expect as a homeowner?
There are many questions to be addressed. Finding the right answers is not always easy. We would be happy to support you and show you your financial options.
