The debate on the abolition of imputed rental value in Switzerland has reached an important milestone. Following intense political debate, the imputed rental value, which has been taxed for decades as notional income for homeowners, is to be abolished for primary and secondary residences. At the same time, the possibility of a property tax on second homes is to be included in the Federal Constitution. What exactly would change as a result of the reform and what consequences could be expected?

What would change with the abolition of the imputed rental value?

Main residences

The imputed rental value would no longer be recognised as taxable income. Homeowners could therefore benefit from a lower tax burden.

At the same time, the deduction of mortgage interest and maintenance costs would no longer apply, which could affect indebted owners in particular.

Second homes

The imputed rental value would also be abolished for second homes, which would provide relief for owners of holiday homes in particular.

However, cantons could introduce their own taxes for second homes, which could lead to higher taxes than with the former imputed rental value tax.

Investment properties

Owners of rented properties could continue to deduct mortgage interest and maintenance costs, as rental income also remains taxable.

However, owners could be burdened more by the proportional limitation.

What would be the possible consequences of the reform?

The abolition of the imputed rental value could have the following consequences:

Relief for owners

Many homeowners, particularly older people with paid-off mortgages, would benefit from the reform as their tax burden could fall significantly.

Fewer incentives for maintenance

As maintenance costs for owner-occupied residential property could no longer be tax-deductible, investment in renovations and refurbishments could decline.

Changed willingness to pay

The reform could change the property market, as properties in mint condition would be favoured over older properties.

What challenges can be expected?

Fairness between tenants and owners

Critics challenge the fact that tenants would still not be able to claim their rental expenses for tax purposes, while owners would be relieved by the reform.

Regional differences

The introduction of cantonal property taxes could lead to a patchwork of tax practices for second homes.

Financial impact

The reform would present the Confederation and cantons with the challenge of compensating for the resulting tax shortfalls without placing an additional burden on other taxpayers.

Conclusion

The possible abolition of the imputed rental value could herald a historic change in the Swiss tax system. Although debt-free homeowners would be relieved, the necessary vote - the abolition of the imputed rental value is linked to the introduction of cantonal property taxes for second homes - also poses challenges. For example, around two thirds of the population live as tenants, who will be critical of potential tax losses. It remains to be seen how these potential changes will affect the property market in the long term.