Imputed rental value. What is it? And when will it be abolished?
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AT A GLANCE
A homeowner at last, you could not be happier. Suddenly, a tax bill appears in your letterbox. Unfortunately it is not a mistake. At the moment, homeowners still have to declare the imputed rental value as income in their tax return. However, this practice – and thus the tax on owner-occupied properties – is expected to be abolished from 2028.
Imputed rental value – what is it?
The term "imputed rental value" (actually "rental value taxation of owner-occupied properties") refers to notional expenditure that a homeowner would incur if they rented their property. In other words, it is a theoretical assumption. However, it is also a specific form of financial relief that benefits the owner – and for that reason it is subject to income tax.
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Calculating the imputed rental value
The methods for calculating the imputed rental value vary considerably between cantons. As a result, the specific amount can differ greatly depending on the canton. However, the imputed rental value is usually set at a level below the expected rental income – in order to fulfil the constitutional mandate to promote home ownership.
More detailed information on local imputed rental values is available from your municipal tax authority.
Imputed rental value – how it is taxed
The imputed rental value is added to the owner's taxable income. In return, however, property owners can deduct their mortgage interest and maintenance costs for residential property from their taxable income. It is essential to claim these deductions when filling in your tax return. Doing so will reduce your tax bill again, after it has been increased by the addition of the imputed rental value.
The imputed rental value is expected to be abolished from 2028
On 28 September 2025, the Swiss electorate voted to abolish the imputed rental value – a decision that will be implemented in 2028 at the earliest. The following changes will occur:
- Abolition of imputed rental value: No more taxation of owner-occupied property.
- Maintenance costs: No more deductions, except for measures to preserve historic buildings; cantons may permit deductions for energy-saving measures.
- Mortgage interest: No more deductions for owner-occupied property. Except for first-time buyers, who can deduct a limited amount of their mortgage interest on property they are living in themselves for the first ten years after the purchase.
- Second homes: Change to constitution allowing cantons to charge special taxes.
- Taxation of assets: Principles remain unchanged.
What impact will the abolition of the imputed rental value have on you personally?
There is no universal answer to the question of how this change will affect your personal situation. However, many homeowners will benefit from the abolition of the imputed rental value. In the current low-interest-rate environment, the imputed rental value is usually higher than the deductions for mortgage interest.
There are special advantages for first-time buyers in the form of an exception and for retired people who have already paid off a large amount of their mortgage. And since renovation costs will probably no longer be tax-deductible from 2028, a wave of renovations is also to be expected.
The optimal set-up for you and your finances after the abolition of the imputed rental value depends on multiple factors, including your financial goals, liquidity, flexibility and return expectations as well as your needs in terms of financial security for your loved ones.
Our advisors will be happy to support you with your financial planning.
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