Save on taxes with your own home and real estate

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.

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.

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.

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.

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.

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.

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.