Imputed rental value: The tax on the imputed rental value for owner-occupied residential property held as private assets will be abolished for both primary and secondary properties.

Tax deduction of maintenance costs: Tax deductions for the maintenance of owner-occupied properties will be abolished at federal and cantonal level (deductions will remain in place for rented or leased properties). Unlike the federal government, however, the cantons can continue to grant tax deductions for energy-efficient renovations and environmental protection measures.

Debt interest deduction: Mortgage interest, or debt interest in general, can only be deducted for tax purposes to a very limited extent. A deduction is now only possible for rented or leased properties. The amount of possible deductions depends on the share of property assets in total assets.

First-time buyer rule: Private debt interest on the first-time purchase of exclusively and permanently owner-occupied properties is only deductible to a limited extent and for a limited period. Married couples can claim a maximum tax deduction of CHF 10,000 in the first year, with this amount decreasing by CHF 1,000 each year; for other taxpayers, half of this amount applies in each case.

Property tax: The cantons are granted the right to introduce a property tax on secondary properties. This enables cantons with a large number of second homes to cushion any tax losses.

 

Distribution effects: Debt-free homeowners benefit significantly more from the abolition of the tax on imputed rental value than indebted homeowners; notional income no longer applies, while the debt interest deduction is massively restricted.

Incentives for maintenance: As maintenance costs will no longer be tax-deductible, it is expected that renovations will be brought forward until the reform comes into force, so they can still be claimed for tax purposes. This may lead to a short-term boom as well as price increases and bottlenecks in the construction industry. However, when the reform comes into force, the incentive to renovate will decrease, which could harm the construction industry.

Mortgage interest rates: Without tax-deductible interest, the real cost of mortgages rises and there is less reason to keep mortgage debt, strengthening the argument in favour of amortising existing mortgages. However, it can also make sense to let mortgages continue to run in order to maintain financial flexibility. This offers the opportunity to invest available funds in forms of investment with potentially higher returns than the interest saved. This is particularly attractive in the current environment of low interest rates. It is important, however, to balance liquidity and repayment, as accessing or increasing mortgages after retirement becomes more difficult due to generally lower income.

Private debt interest: Individuals who do not own rented or leased property in Switzerland forfeit the tax deductibility of debt interest entirely.