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In autumn 2025, the Swiss electorate approved the introduction of property taxes on second homes. As a result, on 1 April 2026 the Federal Council decided to bring the reform of residential property taxation, which is indirectly linked to the proposal, into force on 1 January 2029. From then on, the taxation of imputed rental value on owner-occupied residential property will no longer apply.
What does the abolition of imputed rental value mean for homeowners? We explain this in this blog post. One thing in advance: the abolition will change much more for homeowners in Switzerland than just one item in the tax return.
Anyone who has taken out a mortgage, is planning renovations, owns a second home or would like to pass on their own property one day should review the possible consequences as quickly as possible. This is because, with the abolition of imputed rental value, some tax deductions will be restricted or removed entirely. This affects, among other things, debt interest, maintenance costs and renovation costs. Many owners are therefore asking themselves: Will home ownership become simpler for me from a tax perspective, cheaper – or even more expensive? You will find the answers to these and more questions here.
Imputed rental value is a fictional income that owners must pay tax on for owner-occupied residential property. Anyone who lives in their own house or apartment pays tax on a theoretical rental value. This imputed rental value is intended to prevent or reduce the tax advantage of homeowners compared with tenants, who cannot deduct the rent for their apartment from their taxes either.
In return, owners have so far been able to deduct various costs from their taxes, for example:
The imputed rental value will be abolished following the vote by the Swiss electorate on 28 September 2025. Criticism, especially from homeowners, of what they see as a fictional “rental tax” was supported by a majority of voters.
With the reform, which is expected to come into force on 1 January 2029, imputed rental value for owner-occupied residential property will be abolished. That sounds like relief. At the same time, however, many deductions that were previously relevant for tax purposes will be severely restricted or abolished. You can find out more about imputed rental value in the Houzy blog post on the vote in Switzerland.
Couple sitting in the living room and using a tablet to find out about the effects of the abolition of imputed rental value
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A central point of the reform concerns the debt interest deduction. Until now, homeowners have in many cases been able to deduct their mortgage interest from their taxes. The system change will significantly restrict this deduction.
This has particularly significant effects for owners with:
The planned so-called quota-restrictive debt interest deduction for owners with rented or leased residential property is complicated. Put simply, it means: private debt interest can only be deducted from taxes in proportion to the value of the rented or leased properties in relation to total assets. What matters, therefore, is how large the share of rented properties is in total assets.
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Our example shows how significantly the debt interest deduction can change.
For owners, this means: from a tax perspective, a mortgage becomes less attractive. Debt interest for owner-occupied residential property can generally no longer be deducted at all; for rented or leased residential property, it can only still be deducted in part. The cantons may provide for time-limited exceptions. In addition, people who acquire residential property in Switzerland for the first time should be able to deduct debt interest for a limited period and up to a limited amount.
Because of the new tax situation, households with high loan-to-value ratios in particular should now check whether their financing strategy still fits.
Modern single-family home in Switzerland – residential property that may be affected by the abolition of imputed rental value.
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One of the biggest changes concerns maintenance costs. Many expenses that could previously be deducted from taxes can no longer be claimed in future.
Depending on the implementation, these include, among others:
The change will have a particularly strong impact on the tax burden of owners of older properties. If you own an older property and it is foreseeable that a major refurbishment will be necessary, check quickly whether you can bring it forward. Depending on the situation, this can save you a considerable amount in taxes. At present, many maintenance and refurbishment costs can still be deducted; after the system change, this will be significantly restricted.
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The reform does not only create winners. Whether you as an owner benefit or face a higher tax burden in future depends on your personal situation.
Those who tend to benefit are:
Those more strongly affected are:
Rule of thumb: Anyone who previously benefited greatly from deductions will tend to feel a more or less significant increase in their tax burden due to the extensive abolition of deductions for refurbishment costs, maintenance costs and debt interest. Owners with lower mortgages and low maintenance and refurbishment costs, on the other hand, will tend to see tax relief.
Many questions remain open for second homes and holiday properties. Holiday cantons in particular can introduce new property taxes in order to compensate for tax losses or to place a higher burden on little-used second homes. The specific structure of the tax burden in these cantons is not yet known.
It is also unclear how partially rented holiday apartments will be treated for tax purposes in future. Possible criteria include, for example:
If you own a holiday apartment, this means: the abolition of imputed rental value does not automatically bring tax relief. Depending on the canton and the assessment of usage, new tax burdens may arise.
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The restriction of the debt interest deduction presents you as an owner with a new question: Should I amortise my mortgage more strongly?
Amortisation often makes sense when security, lower debt and planning certainty are the priority. Especially with a view to retirement or when income falls, this can bring tax advantages.
However, amortisation also ties up capital. If, over the long term, you achieve higher returns with your investments than the mortgage costs you, it may be worthwhile keeping the mortgage.
Do you benefit from amortisation or not? Because the tax debt interest deduction will disappear with the abolition of imputed rental value, the overall calculation changes: it is not just about taxes, but about your entire wealth strategy.
In most cases, real estate is the largest asset of a household. That is why the system change affects not only the annual tax return, but also long-term issues such as succession, retirement, inheritance and liquidity.
Discuss important questions with an expert:
Early planning helps avoid later conflicts around real estate, assets, financial bottlenecks and inheritances.
The planned abolition of imputed rental value does not affect everyone in the same way. A personal assessment is therefore important in every case.
As an owner, review questions such as these as quickly as possible:
The abolition of imputed rental value means a system change and a significant intervention in residential property taxation in Switzerland. For many owners, it is not only about a fictional income disappearing. What matters is how financing, taxes, maintenance, refurbishments and wealth planning interact – and how this interaction affects the total net expenses of a household.
If you have little debt and low maintenance costs and own a property that is as good as new, you are more likely to benefit from the abolition of imputed rental value. However, if you have a high mortgage, own an older property or are planning refurbishments, you should act now and carefully review your situation.
In any case, the most important step is recommended: do not look only at individual tax deductions, but at the overall picture of your finances and real estate.
This article is based, among other things, on the presentation by Patrick Arnold, Wealth Planning UBS Switzerland, as part of the Climate Weeks in Zurich. The event brought together experts to discuss current developments around sustainability, home ownership and financial future topics.
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