Abolition of imputed rental value in Switzerland from 2029
- Simon Käslin
- May 26
- 12 min read
Updated: 28 minutes ago
Summary
On September 28, 2025, the Swiss electorate approved the reform of the taxation of owner-occupied housing. With 57.7 percent voting in favor, the constitutional basis was created to abolish the imputed rental value for primary and secondary residences. The Federal Council has set the effective date for January 1, 2029. Until then, a transition period will apply. In return, significant deductions will be eliminated at the federal level, including maintenance costs, energy-efficient renovations, and, to a large extent, mortgage interest. This changes the calculations for private homeowners in Switzerland. Anyone renovating, building, or financing a property today should use the next four years to make decisions based on the current system. This article clearly explains what has been decided, what is changing, and how you, as a homeowner, can react.
Table of contents
Renovate before 2029 or wait?
An independent assessment will show what is still worthwhile in your case, as long as the window of opportunity is open.
1. What was decided on September 28, 2025?
The electorate has approved a constitutional amendment allowing the federal government to abolish the imputed rental value for owner-occupied residential property. Simultaneously, parliament passed a legislative amendment that realigns the system. The reform affects both federal and cantonal taxes.
Specifically, the decision was made to switch to a system without imputed rental value taxation, while simultaneously eliminating most of the associated deductions. At the federal level, the changes will come into effect on January 1, 2029, following a transition period until the end of 2028.
2. What exactly is imputed rental value?
The imputed rental value is the notional rent that owners must declare as income for using their own property. Therefore, anyone who lives in their house instead of renting it out pays income tax on the amount that a comparable property would fetch on the market.
Conversely, under the previous system, owners could deduct mortgage interest, property maintenance costs, and energy-efficiency renovations. The system was intended to create tax equality between tenants and owners.
Switzerland is an exception in Europe with this tax system. The structure has been criticized politically for decades, primarily by homeowners' associations and pensioners' organizations.
3. Why was the abolition of imputed rental value demanded in Switzerland?
Three main arguments were emphasized.
The imputed rental value places a disproportionate burden on retirees. Those who have paid off their mortgage over the course of their lives can no longer deduct debt interest, but still pay tax on the imputed rental value. This leads to high tax burdens for many older homeowners without any cash flow.
The system creates perverse incentives. Those who want to reduce their debt are penalized through taxation. Those who take out large mortgages receive tax breaks. This is problematic from an economic perspective.
The valuation process is opaque. The imputed rental value is set differently depending on the canton. Some cantons deliberately set it low, others high. This creates unequal treatment across cantonal borders.
Proponents of the reform argued for fairness, incentives to reduce debt, and simplification of tax law. Opponents warned of tax losses and negative effects on the construction industry because incentives for renovation would be eliminated.
4. What changes for the imputed rental value in Switzerland from 2029?
At the federal level, this applies from January 1, 2029.
With the abolition of imputed rental value in Switzerland, owner-occupied primary and secondary properties are no longer taxed. In return, deductions for maintenance costs, energy-efficient renovations, historic preservation, and most mortgage interest payments are eliminated.
Rented or commercially used properties will remain under the existing system. Rental income will continue to be recorded as income, and expenses can be deducted.
The cantons have some leeway in implementing the measures. They must also abolish the imputed rental value, but can choose their own solutions for property tax. Some cantons are planning to slightly increase property tax in return to compensate for the resulting revenue shortfall.
5. Which deductions are eliminated?
The following deductions will be eliminated at the federal level with the entry into force of the reform.
Maintenance costs for owner-occupied properties. Anyone installing a new bathroom, renovating the roof, or replacing the heating system can no longer deduct these expenses as maintenance costs. This is a significant change.
Energy-efficient renovations. Previously, insulation, window replacement, and heating system replacement with renewable energy were tax-advantaged. This incentive is being eliminated in the federal tax system.
Expenses for the preservation of historical monuments are no longer tax-deductible.
Interest payments on owner-occupied properties are no longer tax-deductible. This has significant implications for the optimal mortgage strategy.
These cuts are the price for abolishing the imputed rental value. Those with low mortgages and minimal renovation needs benefit. Those with high mortgages and significant renovation needs may lose out.
6. Which exceptions remain?
Two important exceptions regarding debt interest are enshrined in the law.
For rented or leased properties, the deduction of mortgage interest remains valid according to the so-called proportional-restrictive method. Therefore, anyone who rents out a second property can continue to claim the proportionate mortgage interest.
A temporary deduction for mortgage interest is available for first-time homeowners. This is intended to ease the financial burden on young families when they first become homeowners. The exact conditions are regulated in the implementing ordinance.
It remains to be seen whether the cantons will strengthen their own funding programs for energy efficiency measures. The joint federal and cantonal building program will continue, but without the additional tax incentive.
7. What does the transition phase until the end of 2028 mean?
The current system will remain in effect until the end of 2028. This means that imputed rental value will continue to be taxed. Maintenance, energy-efficient renovations, historic preservation costs, and mortgage interest can still be deducted according to the existing rules.
For homeowners, this is a clear message. Anyone planning a major renovation or energy-efficiency upgrade should complete it between 2026 and 2028 if possible. The tax deductions during this period are often worth several thousand francs per tax year.
Caution is advised only for very large investments shortly before the end of 2028/beginning of 2029. In these cases, cantonal transitional regulations may apply, which vary from canton to canton. A brief consultation with a tax advisor or trustee before commencing work is mandatory.
8. How will the reform affect existing owners?
Those who own property today will benefit from the elimination of this tax starting in 2029. The effect is particularly noticeable for retirees with amortised mortgages. They currently pay taxes on the imputed rental value without receiving corresponding cash flow. This burden will be eliminated from 2029 onwards.
Anyone still holding a large mortgage should reconsider their strategy. When mortgage interest is no longer tax-deductible from 2029 onwards, amortisation will become more attractive from a tax perspective. The optimal mortgage amount will shift downwards.
Anyone planning a major renovation should align it with the current tax regulations. Renovation costs are still tax-deductible between 2026 and 2028, but not from 2029 onwards.
9. How will the reform affect building owners?
There are four implications for current and future building owners.
From 2029 onwards, ongoing housing costs after moving in will become more predictable from a tax perspective. The elimination of the imputed rental value will provide relief for families with moderate mortgage burdens.
Those who plan to increase their equity through advance inheritance or gifts will find it more attractive from a tax perspective, because the lower mortgage is no longer penalized by the loss of interest deductions.
Anyone planning a comprehensive energy-efficient upgrade should schedule the investment in such a way that the proportion of tax-deductible renovations is carried out according to current logic, insofar as this is compatible with the construction process.
Those planning a new build can take advantage of the initial purchase deduction for mortgage interest, which will remain in place for a limited time after the reform. Consulting a trustee and mortgage provider is advisable in this case.
10. What should renovators do in the coming years?
Anyone planning a major renovation in 2026, 2027, or 2028 has a window of time in which the current logic applies. Specifically, this means...
Complete energy-efficient renovations such as building envelope, windows, and heating systems during this period. The tax deductions often amount to five figures per year and directly reduce the tax burden.
Implement value-preserving investments such as bathroom renovation, floor replacement or facade refurbishment during this time.
Consider phasing the renovation. Those who spread a major renovation over several years can claim the deduction in multiple tax years and mitigate the effects of progressive taxation. This only makes sense before 2029.
Value-enhancing investments such as extensions or additions can only be deducted upon sale, depending on cantonal practice. This changes little for property owners, as the logic of property gains tax remains in place regardless of federal law.
Important: The exact interpretation is determined by the cantons. Before taking any major measures, clarify the cantonal practice with a trustee or the tax office.
11. What strategy makes sense for new construction project owners?
The following logic applies to new construction: The construction costs themselves are not tax-deductible. Previously, after moving in, owners had to pay tax on the imputed rental value and could deduct mortgage interest. From 2029, both of these deductions will be eliminated for owner-occupiers, with the exception of the initial purchase deduction.
Four steps are recommended:
Reconsider your mortgage strategy. With a moderate down payment, amortisation becomes more tax-efficient. Discussions with your bank and trustee will help determine the optimal amount.
Take advantage of the initial purchase deduction. Young families acquiring property for the first time should clarify the temporary deduction and include it in their tax planning.
Set high energy efficiency standards. If energy-efficient renovations will no longer be tax-deductible from 2029 onwards, it is wise to choose a very high energy standard right from the start of construction. Retrofitting later will become less attractive from a tax perspective.
Optimize your construction and builder's liability insurance. These expenses are not tax-deductible and must be financed from cash flow. Thorough planning is essential.
12. How does the financing logic change?
Mortgage strategy is undergoing a fundamental change. Under the previous system, it often made sense to maintain the highest possible mortgage because interest payments were tax-deductible. This logic no longer applies to owner-occupiers.
From 2029 onwards, the question of the optimal mortgage amount will need to be re-examined. Factors will include the return on equity, mortgage interest rates, personal risk tolerance, and the investment strategy for the released equity.
Those currently paying off their mortgages should review whether to maintain or increase the rate. Those with large mortgages should speak with their bank and have them calculate several scenarios. Tax advice tailored to one's retirement plan is crucial in this process.
From 2026 onwards, banks will increasingly offer advisory services regarding the reform. Take advantage of these offers, but obtain an independent second opinion, as banks naturally have an interest in higher mortgage volumes.
13. What will happen to cantonal taxation?
The cantons must also abolish the imputed rental value. However, they have some leeway regarding property taxes. Some cantons are discussing an increase in property taxes to compensate for lost tax revenue. Others are planning new solutions such as a moderate property tax.
Those living in a canton with a currently high imputed rental value, such as several cantons in western Switzerland or Ticino, often benefit more after the reform. Those living in a canton with a low imputed rental value benefit less.
The cantonal implementation plans are currently under political review in 2026 and 2027. Anyone wishing to plan should keep an eye on cantonal media and the tax administration, or engage a trustee to monitor developments.
14. Three practical case studies
First example: A family owns a home in the canton of Zurich, with an imputed rental value of 28,000 francs, mortgage interest payments of 12,000 francs, and a flat-rate maintenance deduction of 5,600 francs. The current net additional tax burden is approximately 4,500 francs per year, depending on the tax bracket. From 2029, the imputed rental value will be eliminated. The family will save the 4,500 francs, assuming they have minimal renovation needs in the following years.
Second example. A retired couple in the canton of Bern, with a fully amortised mortgage, imputed rental value of 22,000 francs, no mortgage interest, and a flat-rate maintenance deduction of 4,400 francs. The current net additional tax burden is approximately 4,000 francs per year. From 2029, the imputed rental value will be completely eliminated. Clear tax relief.
Third example: A young family plans to build a new home in 2027 in the canton of Aargau. They have a mortgage of 800,000 Swiss francs, an imputed rental value after occupancy of 30,000 Swiss francs, and mortgage interest of 14,000 Swiss francs. The current rules apply until the end of 2028. From 2029 onwards, the imputed rental value will no longer apply. The family should review the temporary initial purchase deduction for mortgage interest and adjust their mortgage strategy to the new system.
15. What mistakes should you avoid?
Don't rely on statements from acquaintances. The reform is complex and its effects vary from case to case. A reliable calculation requires your specific figures.
Postponing renovations. Anyone who plans all measures for after 2029 due to the reform will lose out on energy and comfort savings as well as tax deductions in the meantime.
Amortising a mortgage with a lump sum isn't always the best approach. It depends on asset allocation, investment alternatives, and your personal circumstances. Seek advice before transferring large sums of money.
Forgetting the cantonal aspect. Those living in a canton that increases property taxes as a compensatory measure will experience a smaller net effect. Clarify the cantonal plans before drawing conclusions.
Don't rely too heavily on advice from banks and providers. Banks and trustees with insurance or mortgage interests have their own perspective. An independent second opinion protects against bias.
16. Where can you find reliable information?
Official information on the reform can be found at the Federal Tax Administration and the Federal Department of Finance. Both agencies update their overviews regularly.
Starting in 2026, cantonal tax authorities will publish information on the implementation at the cantonal level. Anyone planning ahead for tax purposes should subscribe to their canton's announcements or entrust this task to a trustee.
Homeowners' associations like HEV Switzerland or cantonal associations offer members detailed practical information. Banks and insurance companies publish analyses that should be read with caution because they represent their own interests.
17. How raumwert plus supports your construction project
The reform affects not only tax returns, but every major decision concerning one's own home. Anyone renovating, converting, extending, or building a new home in the coming years should align the timing, scope, and financing with the new system in mind.
raumwert plus clarifies early on what options your project has and how it will perform during the transition period and in the target system. We outline the new construction and renovation options in parallel, disclose the cost and timeline, and examine the tax implications together with independent fiduciary partners.
Once the direction is clear, we structure the next steps. Renovation, conversion, extension or new construction, always with architectural quality and economic clarity.
Note: This article provides general information on the recently adopted reform of homeownership taxation. It does not replace individual tax advice. The specific impact on your situation depends on your income, mortgage structure, canton, and personal circumstances. Consult a trustee or tax advisor for specific questions.
18. Frequently Asked Questions about the Abolition of Imputed Rental Value
When will the imputed rental value be abolished? On September 28, 2025, the Swiss electorate approved the reform of the taxation of owner-occupied housing with 57.7 percent voting in favor. The Federal Council has set the effective date for January 1, 2029. A transitional phase will be in effect until the end of 2028, during which the current system will remain unchanged.
What exactly is taxed with the imputed rental value? The imputed rental value is the notional rent that owners must declare as income for using their own property. Those who live in their own home instead of renting it out pay income tax on the amount that a comparable property would fetch on the market. Conversely, mortgage interest, maintenance costs, and energy-efficiency renovations could previously be deducted.
Which deductions will be eliminated in return? At the federal level, deductions for maintenance costs on owner-occupied properties, for energy-efficient renovations, and for expenses related to the preservation of historical monuments will be eliminated. Mortgage interest payments will also no longer be deductible for owner-occupied properties. Those with low mortgages and minimal renovation needs will benefit. Those with high mortgages and significant renovation needs may lose out.
Should I carry out a planned renovation before 2029? Anyone already planning a major renovation or energy-efficiency upgrade should, if possible, complete it between 2026 and 2028. During this period, the existing rules apply, and the deductions are often worth several thousand francs per tax year. Caution is advised with very large investments shortly before the end of 2028/beginning of 2029, as different transitional regulations may apply depending on the canton.
What does the reform mean for my mortgage? Under the previous system, it often made sense to maintain the highest possible mortgage because mortgage interest was tax-deductible. This logic no longer applies to owner-occupiers, making amortisation more attractive from a tax perspective and shifting the optimal mortgage amount downwards. In addition to your meeting with your bank, get an independent second opinion, as banks naturally have an interest in higher mortgage volumes.
Are there still exceptions to the deduction of mortgage interest? Yes, two exceptions are enshrined in law. For rented or leased properties, the deduction of mortgage interest remains available according to the so-called proportional-restrictive method. For the initial purchase of residential property, a time-limited deduction for mortgage interest is provided, the exact conditions of which are regulated in the implementing ordinance.
Renovate before 2029 or wait?
An independent assessment will show what is still worthwhile in your case, as long as the window of opportunity is open.
Comments