What the End of the Notional Imputed Rental Value Means for Taxation
Beitrag vom 27.05.2025
A notional imputed rental value has been levied on owner-occupied residential property for more than 90 years. The Federal Court stipulates that the imputed rental value must be at least 60% of the local market-level rent and must be fully taxed as income by the owner. In return, homeowners are allowed to deduct mortgage interest and maintenance costs from their taxable income. The imputed rental value was originally introduced to put tenants and owners on an equal footing.
At the end of 2024, Parliament approved the proposal to abolish the imputed rental value, following a petition from the Hauseigentümerverband (HEV).The imputed rental value for primary and secondary residences will be abolished; in return, maintenance deductions for owner-occupied residential property will no longer be possible. Mortgage interest is deductible only for rental properties and, under limited circumstances, for first time buyers. The National Council and Council of States have also decided to combine the abolition of imputed rental value taxation with a constitutional amendment that legitimizes the cantons to levy a property tax on secondary residences. The mandatory referendum will be held on 28 September 2025.
At this stage, there are no clear tendencies on how the vote will unfold. The amendment may face significant opposition, particularly due to the removal of a key tax incentive associated with mortgage debt and the potential reduction in cantonal revenues. But for many homeowners, the reform entails a compromise between reduced taxation and the loss of certain deductions. If the referendum passes, the timeline for implementation and the transition period are still to be determined. We are closely monitoring developments and will continue to provide updates as more information becomes available.
For all tax-related matters, Ms MLaw Sajika Ratnam, LL.M. (+41 61 555 13 20 / sajika.ratnam@atag-law.ch) and Ms MLaw Seline Schneider (+41 555 13 70 / seline.schneider@atag-law.ch) will be happy to assist you.
