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The imputed rental value will be abolished from 2029. We show what the change means for owners, the financial implications and what course of action is now advisable.
The abolition of imputed rental value in Switzerland represents a fundamental change in the taxation of owner-occupied residential property and affects millions of owners.
After decades of discussion and various attempts at reform in previous years, Swiss voters finally voted 57.7 percent in favor of abolition on 28 September 2025. The change will take effect in 2029.
Do you have any questions about the abolition of imputed rental value?
Whether it’s a second home, renovation needs or a complex wealth situation, the tax implications can be complex. Our experienced advisors will help you assess your personal situation correctly and find the best solutions.
The abolition of imputed rental value means that the notional rental value of owner-occupied residential property is no longer taxable as income – this applies to both primary and secondary residences.
However, the following significant tax relief will no longer be possible:
In an environment of low mortgage interest rates, owners of new apartments in major urban centers in particular will benefit from the tax reform. Imputed rental value is comparatively high in these areas, while the elimination or restriction of deductions is less significant because maintenance costs are generally low.
New buyers also benefit from the first-time buyer deduction for debt interest.
Homeowners who have already amortized their mortgage or have almost done so will also benefit. Pensioners in particular are likely to fall into this category. For them, the abolition of this tax will have a significant impact in relation to their income.
Owners of older properties in need of renovation are most likely to lose out. Those who buy an older house and invest heavily in renovations can no longer claim tax relief on most of these expenses. The price gap between new homes and older properties will widen: new buildings will become more expensive, while old buildings could fall in value.
Owners of second homes are also likely to be among those negatively affected by the reform. It is unclear how high a new cantonal property tax could be. However, the mountain cantons would have an incentive not only to use the tax to compensate for the loss of imputed rental value on second homes, but also to aim for higher tax revenues.
Because there will be fewer incentives for property maintenance, the construction sector may also be among the losers of the tax reform, even though demand for renovations and maintenance work could increase sharply shortly before the abolition. The limited deductibility of debt interest could also make mortgages less attractive. The banking sector as a whole could therefore also be among those affected.
The referendum decision of September 2025 will not be implemented immediately. The new provisions will only come into force after a transition period. Until then, the existing regulations will continue to apply. The Federal Council will decide on the duration of this transition period on the recommendation of the Federal Department of Finance.
During this period, the specific implementation of the new regulations will be worked out, particularly at cantonal level. This is because, in addition to binding requirements, the bill also contains voluntary provisions known as “optional provisions” regarding the tax deductibility of energy renovations. Whether and in what form these will be introduced is up to the cantons to decide.
At its meeting on 1 April 2026, the Federal Council decided to bring the reform of the taxation of home ownership into force on 1 January 2029.
Following the abolition, you won’t be able to use mortgages for tax optimization. This creates an incentive to amortize in order to reduce the amount of interest payable. However, owning your own home ties up a lot of equity in the long term and poses a cluster risk for the growth of your wealth. A constant, moderate loan-to-value ratio promotes diversification and creates scope for higher-yield investments. Investments in financial assets often generate higher returns in the long term than the cost of mortgage interest. However, there are also risks: rising interest rates can make financing more expensive and reduce property values, while investment portfolios are subject to fluctuations in value. A fixed-rate mortgage gives you greater predictability.
Consider bringing any planned renovations forward so that you can still benefit from tax relief during the transition phase, especially in view of the effective cost increase of 20 to 30 percent without tax deductions. Due to increased demand, longer waiting periods may arise, meaning that not all desired work can be completed in time before the abolition.
Enter a few details in our renovation calculator to determine the estimated CO2 emissions and energy requirements of your property. Find out which renovation measures can make your home even more energy efficient.
You and the other co-owners in your condominium association should check whether the contributions to the renovation fund are still calculated correctly. This is because payments can continue to be deducted from taxes until the system is changed. The maximum permissible contributions within the relevant canton must be taken into account.
Before the change comes into effect, it may be advisable for condominium owners’ associations to make higher, tax-deductible contributions to the renovation fund.
The system change is likely to trigger various movements in the Swiss real estate market, both in the short term and over a period of years.
As maintenance deductions are no longer possible, the difference in value between modern and older properties will become more apparent in the future. New or well-maintained properties will retain their appeal, while properties in need of renovation could come under price pressure. Younger buyers in particular will need to budget more realistically for future maintenance and modernization costs.
In regions with a high proportion of vacation homes – especially in mountain cantons – the introduction of a property tax could lead to additional charges. Depending on the specific structure of this tax, it could dampen demand for second homes and lead to more existing properties coming onto the market. However, the actual effect depends heavily on cantonal decisions and how they are implemented.
Investments in property maintenance are likely to increase by 20 to 30 percent if the system changes, depending on the rate of income tax. There will also no longer be an incentive to bundle renovations and opt for relatively expensive options in the case of small repairs, such as replacing kitchen appliances. However, the last decade has already seen a low overall level of renovation activity, which argues against a noticeable decline in renovation investment under the new system. In principle, the abolition of imputed rental value taxation and low interest rates will give homeowners more money to finance renovations in the long term. Ecological renovations, an important prerequisite for the energy transition, require additional incentives in the form of subsidies.
Until now, many owners have had an incentive to deliberately keep their mortgages high in order to deduct the interest from their taxes. With the elimination of this option, the financial advantage of a large mortgage no longer applies. Expected consequences: Lower mortgage debt will become more attractive, and amortization could increase. Owning a home ties up a lot of capital and concentrates risk. A moderate loan-to-value ratio improves diversification and creates scope for higher-yield investments.
By approving the abolition of imputed rental value, the Swiss electorate has spoken in favor of an historic change to the system. For homeowners, this means not only a simpler tax system, but also the need to adjust their tax and financial planning. Since deduction of maintenance costs and renovations for tax purposes will no longer be possible in the future, it makes sense to carry out renovations before the reform comes into force in order to claim them for tax purposes. This applies in particular to major investments such as energy efficiency renovations or modernizations. Homeowners should also find out about the exact transitional periods and cantonal regulations at an early stage in order to make the most of the tax advantages before they no longer apply. Advice from experts can help you use the remaining time strategically and cushion the financial impact of the reform.
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