Properties age, too. According to the life cycle table, the first minor work is due after 10 years. For example, facade plastering (10 to 25 years), joint sealants (10 to 20 years) or sun blinds (10 to 15 years), carpeting (10 to 15 years) or painting (10 to 15 years) and kitchen appliances (10 to 20 years). In the tax return, you can deduct deductible maintenance costs for properties as a lump sum or effectively (with proof of costs) from the imputed rental value and thus from the taxable income. In most cantons, the flat rate is 10 percent of the gross rent or the imputed rental value for new houses or apartments (up to 10 years old) and 20 percent for older properties. You can decide anew each year whether you want to settle at a flat rate or effectively.
The question "Renovate, modernize or refurbish?" sounds philosophical, but it has concrete implications for the tax return and thus for the tax burden. Expenses for modernization or renovation are deductible if they serve to maintain value and/or improve energy efficiency:
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Homeowners must pay tax on the imputed rental value as fictitious income. In addition to the mortgage interest, they can deduct all maintenance and repair costs for value-preserving renovations or refurbishments from the imputed rental value. For example, if you modernize your bathroom or kitchen, renovate the house facade, replace old windows or the heating system. You can also deduct the costs of
may be deducted from the imputed rental value. Condominium owners may also deduct payments into the condominium owners' association's renewal fund that are used for the maintenance of common components. If the value-preserving investments in a year amount to less than 10 percent of the imputed rental value, the expenses are to be deducted as a lump sum. If they amount to more than 10 or 20 percent, you can deduct the costs effectively. To do this, you must list all expenses in the property register or separately and document them with invoices.
Value-adding investments such as a sauna or a conservatory are not deductible. Nevertheless, you should keep all invoices. In the event of a sale, you can add the costs to the original purchase price and thus reduce the property gains tax.
With our renovation calculator you can analyze the condition of your house or apartment, calculate the renovation costs and plan the renovation in a cost-efficient and tax-optimized way. Distribute the investments on several years and break the tax progression.
Energy-efficient renovations are value-enhancing investments. Because the federal government and the cantons want to promote the energy efficiency of properties, these investments are eligible for deduction. Therefore, you can deduct all investments in energy-saving windows, a pellet heating system, a photovoltaic system or a heat pump from the imputed rental value and thus reduce your tax burden.You can also spread all expenses for energy-related renovations over up to 3 tax periods. If the deductions exceed the annual income, you can carry over the remaining amount to the next year and possibly the year after that. Thus, by investing in energy efficiency, you reduce your taxable income and thus your tax burden in 1, 2 or 3 years.
With our energy calculator you can check the energy efficiency class of your house or apartment and simulate the effects of energy renovation measures. The calculator analyzes the savings potential, calculates the investment costs and takes subsidies into account.
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A major renovation, energy-efficient refurbishment or conversion costs a lot of money. If you spread the work and thus the investment over two or three years, you can break the tax progression and pay less tax on the bottom line. Let's assume you earn 120,000 Swiss francs a year and have the building envelope of your house renovated for 80,000 Swiss francs to make it more energy-efficient:
The bottom line is that you can deduct the same amount in both cases: 80,000 Swiss francs. With option 2, however, you pay less tax because the tax burden is progressive and higher incomes are taxed at a correspondingly higher rate. You are therefore better off paying tax twice on an income of 80,000 Swiss francs than paying tax once on 40,000 Swiss francs and once on 120,000 Swiss francs.
If the investment exceeds your income, you should stagger the work. Suppose you earn 120,000 Swiss francs per year and spend 150,000 Swiss francs on value-preserving investments. If you have all the work done in the same year and deduct all the costs from your income in the same tax period, you will have negative income and pay no income tax. The 30,000 Swiss francs you deducted too much are lost for tax purposes and cannot be deducted in the following year. With one exception: You can carry over investments in energy-related renovations to the next year or the year after if you were unable to fully deduct the costs from your income in the first year. If you earn 120,000 Swiss francs per year and spend 150,000 Swiss francs in one year on roof and facade insulation, new windows, a photovoltaic system and a heat pump, you can deduct 120,000 Swiss francs in the first year and the remaining amount in the second year.
The gradual energy refurbishment of the house or apartment makes fiscal sense and is also recommended by building experts. The energetic renovation avoids building defects such as dampness, mold or thermal bridges; in addition, the new heating system can be adapted to the lower energy demand. The four-step procedure has proven itself in practice:
Anyone who renovates their house or apartment to make it more energy-efficient optimizes the tax burden in the short term and reduces energy consumption and thus energy costs in the long term. A new heating system, new windows and a better insulated house facade have an energy-saving potential of 60 percent. Furthermore, the federal government and the cantons provide financial support for energy-efficient renovations. In addition, you can benefit from discounted green or sustainable mortgages with more and more banks and increase the value of your house or apartment. Energy-efficient renovations are therefore worthwhile both ecologically and economically.
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