The taxation of the imputed rental value has been a political issue in Switzerland for decades. Now a vote is coming: on September 28, Swiss voters will go to the polls to decide on the abolition of the imputed rental value. Who would benefit? Who would lose? What is it all about? Here is everything you need to know about the imputed rental value and the vote.
The imputed rental value is not a special tax regulation unique to Switzerland. Other countries in Europe, such as Spain, Italy, Luxembourg, the Netherlands, and others, also levy taxes based on imputed rental value. The origin of the imputed rental value in Switzerland goes back over 100 years: it was introduced in 1915 as a one-time war tax, in 1934 it was temporarily levied as a military tax to stabilize the federal budget, and finally, with the approval of the people and the cantons in 1958, it was permanently enshrined in federal law.
The imputed rental value is based on a notional value that you, as a homeowner, gain from a property you occupy yourself. This notional value is set by the tax authorities. It represents estimated income you would earn if you rented your apartment or house to a third party. This notional imputed rental value of your property is taxed as income. In return, you may deduct mortgage interest – in particular, the mortgage interest you pay on your home – as well as renovation costs from your taxable income.
Background of the regulation: tenants and owners are intended to be treated equally and taxed in the same way. Tenants cannot deduct rent from their taxes, whereas owners benefit from deductions for mortgage interest and renovation expenses. The imputed rental value is meant to offset these advantages.
In connection with the September 28, 2025 vote in Switzerland, terms like “imputed rental value initiative” or “abolition of the imputed rental value” are commonly heard. However, the official title of the measure being voted on is: “Federal Decree on Cantonal Property Taxes on Second Homes.” What does this actually mean?
It can be confusing. Specifically, Swiss voters are deciding whether the cantons may introduce a tax on second homes to compensate for potential revenue losses if the imputed rental value is abolished. The imputed rental value, which is not explicitly mentioned in the proposal, would be abolished—but only if the people and cantons approve the second-home tax.
If this happens, the notional income from rental value on owner-occupied property would disappear. To create a balance, homeowners would in most cases no longer be able to deduct mortgage interest, maintenance, and renovation costs on their property from taxes.
The parliament has already passed a law abolishing the taxation of imputed rental value and limiting deductions for first and second homes. At the same time, a constitutional amendment allows cantons to impose a special property tax on primarily owner-occupied second homes, as otherwise, they would lose significant tax revenue.
Constitutional amendments must be approved by the people and the cantons. The abolition of imputed rental value taxation is legally linked to this constitutional amendment. Therefore, the vote on the special property tax now decides whether imputed rental value taxation will remain. This is a systemic change in the taxation of homeownership, affecting both homeowners’ tax burden and federal, cantonal, and municipal revenues.
The abolition of imputed rental value originates from a parliamentary initiative and is primarily supported by the Swiss Homeowners’ Association and political parties that consider the imputed rental value unjust. They argue that it is a tax concept that taxes owners on notional income they do not actually receive.
Many homeowners would be taxed despite not earning any real income. Older homeowners, who often have fully or mostly paid-off mortgages on their owner-occupied homes, would be particularly burdened by this notional income, potentially making it impossible for them to keep their property in retirement.
The vote is polarizing. Center-right parties support the abolition, arguing that the imputed rental value is outdated and unfairly disadvantages homeowners.
Traditionally left-leaning parties, and sometimes the GLP, oppose abolition. They warn that eliminating deductions for mortgage interest could make financing new properties more difficult, especially for young families. They also fear revenue losses for the federal government, cantons, and municipalities, which would need to be offset by other taxes, potentially burdening the middle class and tenants unfairly.
Overview of major party and association positions:
If voters approve the measure, it would result in a systemic change in the taxation of owner-occupied primary and secondary residences. Approval would affect the Swiss real estate market and homeowners’ taxation in various ways.
Key points:
Current homeowners:
Abolition mainly provides tax relief for owners of debt-free or mostly paid-off properties. They benefit because they would otherwise have only minimal or no deductions for mortgage interest. Owners of older properties needing renovation may reconsider investing in upgrades, as costs would no longer be deductible.
Future homeowners:
For new buyers taking out a mortgage, the abolition would eliminate the associated tax benefit of deducting mortgage interest, potentially making homeownership more expensive, especially for young families and first-time buyers. The new law provides limited deductions for first-time buyers on primary residences.
Who benefits depends on multiple factors: property condition, age, loan-to-value ratio, mortgage rate, and personal income. Generally, older properties needing renovation could become less attractive, while new builds gain appeal. Owners of older properties with high mortgage debt benefit the least.
Approval of the measure would fundamentally change the taxation system for homeownership in Switzerland. This change affects tax policy, housing policy, the ability to acquire property, and construction and renovation activity. It also impacts the finances of every Swiss resident, regardless of property ownership.
While many homeowners hope for significant tax relief, opponents warn of negative effects on public finances and the purchasing power of current and future generations.
