Abolition of imputed rental value in Switzerland

On 1 April 2026, the Swiss Federal Council formally approved the abolition of the imputed rental value, with the reform set to come into force on 1 January 2029. Here is a clear overview of the key changes and what they mean for taxpayer.

The announcement marks a major shift in Swiss property taxation. But what does it actually mean for homeowners? The reform, shaped by years of political and fiscal debate, will significantly reshape the current system, removing certain tax advantages while introducing new balancing measures.

The end of imputed rental value taxation

Until now, homeowners have been required to declare the so-called imputed rental value as income – essentially a theoretical rent they could earn if the property were leased. From 2029, this notional income will no longer be taxed, whether for primary residences, second homes or holiday properties.

Changes to property-related tax deductions

The reform does not simply remove a tax, it also revises the deduction framework that currently helps reduce the overall tax burden. Key changes include:

• Maintenance costs
  Expenses for the upkeep and repair of owner-occupied properties will no longer be tax-deductible at federal, cantonal or municipal level.
• Mortgage interest
  The deductibility of mortgage interest will be significantly reduced. Going forward, it will only be allowed in proportion to income-generating real estate (such as rental properties) relative to total assets.
  A temporary exception will apply to first-time buyers, who will benefit from preferential deductions for up to 10 years.
• Energy efficiency investments
  Costs related to energy-saving improvements and environmental measures will no longer be deductible for federal direct tax purposes. However, cantons may choose to maintain these incentives locally, potentially on a limited basis.
  
  

Compensatory measures

To offset potential revenue losses (particularly for tourism-driven municipalities) the reform allows cantons to introduce a specific tax on second homes that are primarily used for personal purposes.

NFS Group’s perspective

With a clear implementation date now in place, it becomes easier to assess the potential impact of the reform. While some homeowners may benefit from a lower tax burden, others could face higher overall taxation due to the loss of key deductions, particularly mortgage interest and maintenance costs.

The transition period leading up to 2029 offers a valuable window to take informed action. This may include bringing forward renovation or energy-efficiency projects to take advantage of existing deductions, or reassessing one’s mortgage structure.
At the same time, reduced interest deductibility makes it worth considering amortisation strategies, alongside careful planning of liquidity and pension needs.

In light of these changes, a tailored review of your tax and wealth situation is essential to fully understand the implications of the reform and define an effective strategy.

NFS Group’s team of tax and wealth planning specialists is available to assess your individual position, model future scenarios and identify the most appropriate solutions.