Imputed rental value is going away – What changes?
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In September 2025, Swiss citizens voted for the removal of the imputed rental value. This will start from tax year 2029, as per the federal council. So, what will change when this reform takes effect?
In this article, we go into detail about the imputed rental value and its removal. Some of the consequences may not be expected. And there are even consequences for renters.
Imputed rental value
If you are a real estate owner, you will probably know what the imputed rental value is, but many people do not know this tax well.
The imputed rental value tax started in 1934 as a crisis tax levy during the Great Depression. It was then validated as a permanent tax in 1958. It is a tax on fictitious income. The idea is that homeowners get taxed on what they save on rent. So, even though they do not get any income from their home, they are still taxed as if they rented it out.
However, this also comes with deductions. Since homeowners are taxed on the imputed rental value (even though they have no income), they can also deduct the interest they pay to the bank. Additionally, they also can deduct maintenance costs and renovation costs for the house. If they have to change a water boiler, for instance, this can be deducted from the taxable income.
In practice, this tax increased taxes for people with low mortgages and low renovation costs. But it decreased taxes of people with high mortgages and high renovation costs.
In itself, this tax is not very complicated. The only complicated thing about it is that it was necessary to fill out a complete questionnaire when buying a new house. This questionnaire tried to assess the imputed rental value of the house based on the size, the location, and the quality of the house.
However, even though it was not complicated, its removal may have some significant consequences.
Removal of imputed rental value
On September 28th, 2025, Swiss citizens voted for the removal of the imputed rental value, with a strong majority of 57.7%. The object of the vote had a confusing name because it was called “cantonal tax on second homes” and did not mention imputed rental value. If you want to read the details from the confederation itself, you can check out the official reform page.
Originally, the enforcement date was not announced. But in April 2026, the federal coucil announced that this will start into effect in January first 2029.
So, starting from 2029, this tax will not be levied anymore. Until this point, nothing changes.
Changes
So, we will now cover the main changes that will happen when the tax ceases. As we will see, there are even some consequences for non-owners.
1. No more imputed rental value
The first obvious change is the removal of the imputed rental value. New homeowners will not have to fill out the questionnaire. And this fictitious income will not be added to the taxable income of property owners.
This will result in a net decrease in taxable income for every homeowner. But this is only one piece of the change.
2. Passive debt cannot be deducted (for renters too)
One major change is that homeowners will not be able to deduct the interest on their mortgage. Until now, the entire mortgage interest payments could be deducted from the taxable income.
Not being able to do that anymore will have some consequences. First, it makes repaying a mortgage more interesting than before. Before, repaying a mortgage meant that taxes would go up. Now, taxes will not move when repaying a mortgage. This will make indirect amortization significantly less interesting. We may see more people repaying their mortgages than before.
What many people do not know is that this change is broader than just homeowners. The change also means that renters cannot deduct interest on private passive debt. Until now, people could also deduct interest payments on personal loans, consumer loans, or Lombard loans. It is worth mentioning that this only concerns passive debt, that is, debt that is not tied to an income-generating asset.
Active debt (debt to buy an income-generating asset) remains deductible. Debt on income-generating assets could be a mortgage for a rental property. So, owners of rental properties can still deduct it. Another example would be a business loan.
With that change, some people will pay more taxes because they will not be able to deduct the debt payments. Lombard loans will likely become less interesting. And even car loans will become less interesting since one of their advantages was to be tax-deductible (compared to a lease, which is not).
So, this change is a net increase in taxes for every person with debt (except for rental properties).
3. Maintenance costs cannot be deducted
For most, the most impactful change is that maintenance costs cannot be deducted anymore. Until now, if somebody had to redo their roof, they could deduct that expense from their taxable income. This made a significant difference in taxes and was one of the most powerful Swiss tax deductions.
Renovations that added value to a house (like a pool) could not be deducted. However, renovations that increased the energy efficiency of a house could be deducted. For instance, replacing an oil heater with a heat pump could be deducted.
When the change goes into effect, no tax deduction will be possible for maintenance.
In my opinion, this change will make a very significant difference. The main issue is that energy-efficiency renovations will not be deductible anymore. I expect fewer renovations in that area to happen after the removal goes into force. Most people will not renovate their house for energy efficiency without a tax break. In a situation where reducing environmental impact is important, this change may have severe consequences.
These deductions remain possible for rental properties.
Overall, we can expect fewer renovations from homeowners when imputed rental value goes away.
Cantonal changes
Currently, all the chances from the removal of the imputed rental value apply at both federal and cantonal levels. Indeed, these are things that cantons are following from the federal deductions. In this case, the cantons follow the federal tax framework.
The federal council has stated that cantons can introduce new deductions on their own. This is one of the reasons for the transition period.
As of October 2025, we have no concrete information about cantonal changes. So, we must assume that currently all cantons will simply follow the federal changes. But things may change by the time the reform enters into force. I do expect some cantons to allow deductions for energy efficiency upgrades.
Exception for first-time owners
In the law update, there is an exception for first-time owners that can deduct the mortgage interest from their taxable income. It must be the first time they purchase a property, and this property must be a primary residence.
A married couple can deduct 10,000 CHF the first year. Then, this is reduced linearly over 10 years (9,000 CHF the second year, 8,000 CHF the third, and so on). An individual can deduct 5,000 CHF the first year. Then this is reduced linearly over 10 years (4,500 CHF the second year, 4,000 CHF the third, and so on). After 10 years, no more deduction is possible.
For eligibility, the purchase date will be considered. So, even people who bought before the reform could get some years of deduction. For instance, if the reform starts in 2029 and somebody bought in 2024, they will be able to deduct until 2034.
This is made to encourage first-time owners.
Before and after summary
We can make a quick comparison of the before and after situation.
| Subject | Before | After |
|---|---|---|
| Imputed rental value | Taxed as fictitious income; questionnaire on purchase | Removed |
| Mortgage interest | Deductible from taxable income | Generally not deductible (exception for first-time owners; rental properties) |
| Passive debt interest | Often deductible (subject to limits) | Not deductible (confirm scope; federal vs. cantonal rules) |
| Maintenance & renovations | Maintenance and energy-efficiency upgrades are deductible | Not deductible |
| First-time owner relief | N/A | Temporary deduction, linearly reduced over 10 years |
The transition period – Between now and 2029
The removal of imputed rental value has been voted on, but no change will come until 2029.
So, during the transition period, everything stays as such. However, since we know that things are going to change soon, it is good to be prepared and anticipate.
One thing that will likely make sense is to shift some renovation work earlier if they can fit it in during the transition period. Anything after the period will be less tax efficient. For instance, if you planned for solar panels in 2029, it would be safer to move that to 2027 or 2028 (if finances are possible).
It is also worth mentioning that cantons may introduce some deductions, but these deductions will only be at the cantonal and municipality levels. So, these deductions will be less efficient than before. And they all will be different for each canton.
Our strategy
We plan to renovate our house earlier than planned to get tax deductions and avoid some renovations later.
In 2025, we bought a house, and we have multiple renovation projects in the future. So for us, the removal of the imputed rental value means a change in strategy as well. We will probably cancel some of our projects if they cannot be deducted from taxes.
In the next five years, we were planning to put solar panels on our house. Given this change, solar panels will become a priority over everything else. Indeed, this is the most expensive planned renovation. And financially, it only makes sense with a tax deduction; otherwise, it will be too expensive.
Some of the renovation work we planned will be moved to 2027 as well. We will basically do more in 2027 than we planned in the next few years. And it is highly likely that we will cancel some of the most expensive renovations that we planned because they would only have made sense with the deduction.
We were also thinking about some insulation work, but I do not think we will do that at all. Changing the windows also does not make too much sense anymore.
Overall, for us, the removal of the imputed rental value means shifting some work earlier and canceling some other work that is planned for later.
Conclusion
Swiss citizens have decided to stop the levy of the imputed rental value. This change will come into effect in tax year 2029. At this time, the imputed rental value will not exist anymore. Additionally, passive interest will not be deductible either, just like renovations and energy-efficiency upgrades.
For some people, this will mean higher taxes, while others will profit with lower taxes. This mostly depends on the amount of renovation done and the amount of amortization already done.
On one hand, I am glad this complex and fictitious tax goes away. But on the other hand, I am worried about the state of renovations, especially about measures for energy efficiency, which we need.
If you would like to learn more, you can read about Swiss taxes in detail.
What about you? What do you think about this change?
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great article like always! thanks for putting this together!
So in short, if I understood well, for a first time owners this is rather good news as:
1. They are not taxed on imputed rental value anymore
2. They can still deduct the interest they pay on their loan
Correct?
Renovations not being any longer deductible yes, a big hit for everyone!
Hi Bapt
Thanks!
Yes, for first-time owners, this is a good deal, especially if they bought a recent property that does not require much maintenance.
Hello Baptiste,
thank you very much for this overview.
I am wondering whether it will be possible to do renovations that are financed by 2nd pillar early withdrawals?
I see this as a potential opportunity to still get tax deductions from the money spend on renovations (of course, with some limitations). Would be curious to know your opinion on that…
Hi Maïa
Yes, it should still be possible. But these are quite different rules. You can only use the second pillar for work that adds value to the house. This is the contrary of the tax deductions where you cannot deduct work that adds value to the house.
You don’t get a direct tax deduction, but you could do a voluntary contribution and use it (more than 3 years later), and this would be a one-off tax deduction. But since you then have to pay withdrawal tax on the withdrawal, I am not sure if it’s worth it.
(it’s very bad that comments cannot be replied to “infinitely” – the comment I’m replying to has no “reply” button)
Yes, Zinsen are the interests. So these we won’t be able to deduct anymore.
Does anybody know of a calculator which could simulate what happens to one’s tax declaration after the changes will take place?
Yes, I know, WordPress comments are rather limited. I can increase the nesting, but then it messes up the entire design. Long conversations are probably best done on the forum. :)
Yes, interests deductions are going away. I am not aware of any such calculator. You have to balance interest rate deductions + maintenance deductions and imputed rental value.