Politics & Practice
Current status of the abolition of imputed rental value.

What is known so far

• Entry into force

  The Federal Council has decided that the abolition of the imputed rental value will come into force on January 1, 2029. Therefore, for the first time, no imputed rental value will need to be taxed for the 2029 tax period.

• Income tax on owner-occupied properties

  The tax will no longer be payable on the imputed rental value of owner-occupied properties. This applies to owner-occupied primary residences as well as second homes. In addition, the imputed rental value of second homes abroad that are used by their owner will no longer be taken into account when determining the applicable income tax rate in Switzerland.

• Income tax on properties used by third parties

  Income from properties rented out to third parties will continue to be treated as taxable income.

• Additional property tax on second homes

  As a relief measure, particularly for tourism-dependent municipalities, the Cantons have been given the option of introducing an additional property tax on second homes that are used predominantly by their owners. The Bern Cantonal Government has clearly expressed its intention to introduce such a property tax on second homes. This will require an amendment to the Constitution of the Canton of Bern, which will be put to a public vote.

• Deductibility of property maintenance costs

  With the abolition of imputed rental value, maintenance costs for owner-occupied properties will no longer be classed as tax-deductible expenses.

  At the level of direct federal tax, expenditure on energy and environmental protection measures will no longer be deductible either. The Cantons are free to decide whether to continue allowing deductions for energy and environmental protection measures up to 2050 at the latest.

  Costs incurred for heritage conservation work will remain deductible at both federal and cantonal level.

  For properties used by third parties, maintenance costs will remain deductible for income tax purposes.

• Deductibility of debt interest

  In general, debt interest will no longer be tax-deductible. This also applies to interest on debt not related to property financing (e.g. Lombard loans).

  Debt interest relating to properties that are rented out will, however, remain tax-deductible. This will be calculated using the quota-restrictive method, which determines the ratio of non-owner-occupied immovable assets to the taxpayer’s total assets.

  For first-time buyers of a residential property, debt interest will remain tax-deductible up to a maximum of CHF 10,000, with this limit decreasing by 10% each year from the date of acquisition.

• Lump-sum taxation

  For taxpayers who maintain their own household and are subject to lump-sum taxation, the imputed rental value serves as a reference figure for determining the tax base. To ensure this remains possible in the future, an official rental value (‘market rent’) will continue to be determined for properties in the Canton of Bern by the Cantonal Tax Administration.

What remains unclear

• Additional property tax on second homes

  It is not yet clear how the planned additional property tax will be structured in terms of the tax base, the tax rate and the assessment procedure. It is also unclear which criteria will determine whether a property qualifies as a ‘predominantly owner-occupied second home’.

  Ultimately, the introduction of this property tax will depend on the will of the electorate in the Canton of Bern.

• Deductions for partially owner-occupied properties

  With regard to maintenance costs and the deduction of debt interest, it remains to be clarified how these will be apportioned and deducted in the case of partially owner-occupied properties.