On 28 September 2025, the Swiss electorate indirectly approved the abolition of the imputed rental value: 57.7 percent and a majority of 16.5 cantons voted in favor of the Federal Council’s proposal. The exact date of entry into force of the reform has not yet been set, but it will likely be no earlier than 2028. This leaves a transition period, which both buyers and sellers of property should take advantage of. Houzy shows what you should tackle now to save taxes before this far-reaching reform changes much of the familiar system.
Much useful information on the subject can be found in our blog post “Vote on the abolition of the imputed rental value – an assessment” Here is a short recap.
The imputed rental value is based on a fictitious income that you, as a homeowner of an owner-occupied property, are deemed to receive. This fictitious income is set by the tax authorities and corresponds to the estimated rent you would earn if you rented out your home. This imputed rental value is taxed as income.
In return, you are allowed to deduct debt interest – in particular, mortgage interest – as well as renovation costs from your taxable income.
Background of the regulation: tenants and owners should be treated equally and taxed in the same way. Tenants cannot deduct rent from their taxes. Owners, however, benefit from tax relief through deductions for interest and renovations. The imputed rental value is intended to offset these advantages.
On 28 September 2025, voters decided to abolish the imputed rental value for owner-occupied property at the federal level. In return – with certain transitional provisions – the deductions for interest and renovations that homeowners could previously claim in their tax returns will also be abolished. Whether certain energy-related renovations remain tax deductible will be left to the cantons, meaning practices will differ from canton to canton.
For buyers of property, the main change concerns financing. The possibility of using mortgages as a tool for tax optimization disappears. Since mortgage interest will no longer be deductible, it becomes less attractive to take out as high a mortgage as possible. Many banks therefore expect that demand for high loan-to-value mortgages will decline, while the share of equity used will increase. Buyers will also have a stronger incentive to repay their mortgage more quickly in order to reduce interest costs.
However, not everyone – especially younger people – can afford a high proportion of equity when buying property. To make entry easier for first-time buyers, transitional rules apply: in the first year after purchase, married couples can still deduct up to CHF 10,000 of mortgage interest, individuals up to CHF 5,000. The amount then decreases by one tenth each year until it disappears entirely after ten years.
In the long term, purchasing property will become easier, because the much-criticized fictitious “rental tax” disappears. At the same time, however, the general interest deduction is also abolished, meaning high mortgages can no longer be cushioned fiscally. Buyers will therefore need to pay more attention to sustainable loan ratios. Cautious, and possibly new, financing models that include more pension funds from the 3rd pillar may result. For younger people in particular, it could become harder to meet affordability criteria.
Families or buyers with low levels of debt are likely to benefit from the new system, because their taxable income will no longer be artificially inflated by the imputed rental value. They will enjoy a lower tax burden.
The impact of the abolition on individual owners depends on many factors – especially location, loan-to-value ratio, renovation needs, and mortgage interest rate. No universal statement can be made; each case is different.
In the medium term, the abolition of the imputed rental value may slightly support real estate prices. New or well-maintained homes with low renovation needs will become more attractive.
However, the sales prices of older homes are likely to come under pressure: potential buyers will take into account that upcoming renovations can no longer be deducted from taxes, which will negatively affect the market value of older properties.
For sellers of second homes, there is an additional factor: cantons in tourist regions may introduce a property tax to compensate for lost revenue, which could reduce the attractiveness of vacation and second homes.
Sellers of homes in need of renovation now face key questions:
Such a fundamental change to our tax system as the abolition of the imputed rental value is rare in Switzerland. Accordingly, there is great uncertainty about who will benefit and who will lose. One thing is clear: the federal government and cantons will not forgo their accustomed tax revenues, and will introduce compensations. For some, the tax burden will decrease; for others, it will rise.
Houzy recommends: Use the transition period until the new system is introduced to bring forward planned renovations of your property. For now, you can still deduct maintenance and energy-saving measures from your taxes. After the reform, this possibility disappears, making renovations noticeably more expensive.
Therefore, check now whether it makes sense for you to renovate windows, roof, heating system, façade, or insulation in the near future. You can still save a lot of tax money.
Energy and environmental measures such as replacing oil and gas heating with heat pumps or installing solar panels may continue to be subsidized and deductible at the cantonal level. Whether this applies in your canton is still unclear; what is certain is that this option will disappear at the federal level. For this reason too, it is worthwhile to use the transition period to advance energy-efficient refurbishments.
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The abolition of the imputed rental value brings many advantages, especially for owners with low mortgage debt and for first-time buyers. Those who live in a property in need of renovation, however, will face a higher tax burden.
As a result, property prices in the real estate market are likely to move in different directions: new and well-maintained properties will gain in value, while older homes will come under pressure. It is also possible that the threshold at which it is no longer worthwhile to renovate an existing property will fall, leading owners to consider demolition and complete rebuilding more quickly.
Our recommendation is clear: Take advantage of the two to three years until the tax reform is implemented – for renovations, energy-efficient refurbishments, and future-proof financing. Benefit from the available deductions while you still can.
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