You can fully deduct debt interest from your taxable income. The same applies to mortgage interest : The more interest you pay, the less income you will have to pay tax on. This reduces the financial burden of your mortgage. To benefit from the maximum tax savings, it is important for the amount of the mortgage to be adapted to your personal situation and to the current interest rate environment.

Residential property and taxes

Save on taxes with your own home and real estate

Q: Taxes on rented property

If you own a property and rent it out, the rental income you receive must be declared as income. It will therefore be taken into account in your income taxes. The amount of tax you will have to pay on your rental income depends on your canton of residence and your other income.

With careful planning, you as a property owner can save on taxes. These can vary depending on the canton and municipality. Find out which tax issues are relevant for residential property and rented properties.

18 May 2025 12 min read

Content:

Different tax rules apply to owner-occupied properties than to rented properties.
Find out about your deduction options for residential property.
Property gains tax, which is often progressive, is payable on a sale.
As an inheritance or gift, real estate is subject to taxes, the amount of which depends, for example, on the degree of kinship.
To the conclusion

Taxes on rented property

Taxes on owner-occupied property

If you live in a property yourself, you will have to pay tax on its imputed rental value in accordance with current legislation. This corresponds to around 60 to 70 percent of the rental costs for a similar property. Property tax may also be due. This tax does not exist in the cantons of Zurich, Schwyz, Glarus, Zug, Solothurn, Basel-Landschaft and Aargau.

Property tax is a proportional tax based on the value of the property. It amounts to between 0.1 and 3 per thousand of the property value. And finally, there is wealth tax. Here, you declare the taxable value of the property as an asset in your tax return.

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The change to the system for taxing residential property was approved in the popular vote of 28 September 2025. This abolishes the imputed rental value for primary and secondary residences, severely restricts the deduction for private mortgage interest and eliminates the deduction for maintenance costs. The cantons will now have the option of introducing a cantonal property tax for owner-occupied second homes. The exact date of entry into force is not yet known. Until then, the regulations described in the article regarding tax deductions apply.

If you live in a property yourself, you have various options for claiming tax deductions. Find out about the different ways for property owners to reduce their taxes, and obtain an overview of the biggest savings factors.

Mortgage interest

Value-preserving expenditure

Renovation and maintenance costs are deductible from your taxable income if they help maintain the value of your property. Examples include replacing old windows, the heating system, maintaining the garden or carrying out painting work. If you renovate your kitchen, the costs for the same-value replacement of your cabinets and appliances such as a refrigerator or stove are also deductible. Value-enhancing investments such as the installation of a new sauna or whirlpool, on the other hand, are not deductible. These can be deducted from property gains tax in the event of a future sale. In the case of condominiums, the contributions to the renovation fund are deductible if they are only used for the maintenance of the common areas.

Building insurance and fees

You can only partially deduct current ancillary costs in connection with the property from your taxable income. You can claim insurance premiums such as building insurance, administration costs and property tax in your tax return. Operating costs such as usage-related expenses for heating energy and electricity are not deductible, nor are basic charges for wastewater and trash, for example, if these are charged according to the polluter-pays principle.

Energy-efficient renovation

Although investments to save energy or to use renewable energies are value-enhancing, you can still deduct them from your taxable income. These include, for example, the cost of new energy-saving windows, thermal insulation of floors and walls, conversion to a heat pump heating system or the installation of a photovoltaic system. Tradesmen’s services are also deductible, but not subsidies. In the case of extensive renovations whose costs exceed your taxable income in the year, you can spread the declaration of expenses over three years.

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Lump-sum deduction vs. effective costs

You can decide whether you declare the effective costs or a lump sum in your tax declaration.

Lump sum: If only minor maintenance and renovation costs are incurred in a given year, you may still deduct a lump-sum amount from your taxable income. You do not need to furnish evidence of the specific expenses. At national level and in most cantons, the deduction for properties that are more than ten years old is 20 percent of the imputed rental value or gross rental income, and 10 percent for more recent properties.
However , in years with larger expenses that are higher than the lump sum, it is worth listing the actual costs in detail and deducting them. In this case, collect all invoices and receipts and submit them to the tax authorities.

Staggering major renovations

If you are planning to carry out major renovation work whose total cost exceeds the flat-rate deduction, you should arrange for it to be spread over several tax periods in order to break the progression. You can achieve this by dividing the work between different renovation phases or having it carried out over more than one year. If work spans several years, it is also important to split it between separate invoices. Find out in advance what renovation costs you can expect and find out how you can save on taxes by renovating.

Amortization

If you want to save on taxes, it may be worthwhile to keep the mortgage debt unchanged until the end of the term and save money in the meantime. With this indirect amortization, you can deduct the contributions to the 3rd pillar up to the set maximum amount from your taxable income. Additionally, the mortgage amount remains the same over the years because it is only amortized, for example, at the time of retirement. The amount of deductible interest also remains stable.

In the case of direct amortization, where you repay your mortgage in installments, you can deduct less interest each year. This is because your debt amount and thus the interest burden decrease from year to year.

You also have to pay tax when selling property. The main tax due is property gains tax. In simple terms, this is a tax that is payable on the difference between the purchase and the sales price. The difference can be reduced by various deductions, such as any value-increasing investments made. In many cantons, this tax is progressive, meaning that the amount of the tax depends on the amount of profit. The holding period also plays a role in calculating tax: The longer you have owned the property, the less tax you will have to pay. But watch out, if you sell your property after a shorter holding period (e.g. within the first five years), you will have to pay a surcharge, which varies depending on the canton.

Property gains tax does not always have to be paid immediately. It can be deferred if you buy a replacement property within a fixed period (usually two years) and live in it yourself. In this case, the tax is due at a later date.

The facts about your preferred municipality

Do you want to understand how property prices or population levels have changed in a municipality? Or how the location is perceived in general? How high are taxes? The UBS municipality guide is free of charge and answers all your questions.

To the municipality guide

Real estate is also often passed on as part of an inheritance or as a gift. It will then be subject to gift tax or inheritance tax. The value of the property and the degree of kinship play a major role. The higher the amount of the inherited assets or the gift and the more distant the degree of kinship, the higher the taxes payable by the heirs or recipients. These taxes are generally payable in the canton where the property is located.

Whether buying or selling, gifting or inheriting, self-use or renting: Thorough planning is essential for property owners to achieve optimal tax results. Depending on the canton, there are different points to consider regarding taxes and real estate. To find detailed information on property taxes, it is worthwhile to visit the websites of the respective cantonal tax administrations. These often offer comprehensive information and online calculators. Additionally, if you are aware of the tax-saving opportunities, property ownership can provide tax benefits, such as through indirect amortization via the 3rd pillar or early asset transfer.

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