Abolition of the Imputed Rental Value: What Happens Next?

The new system for taxing owner-occupied residential property—without the imputed rental value and without the current tax deductions—is not expected to come into force before 2028. Many details have yet to be finalised. Here are five key questions to consider.

Should You Renovate?

The current tax deductions for maintenance work will remain available until the new rules take effect. It may therefore be worthwhile to move forward with renovation and refurbishment projects.

The same applies to energy-efficiency improvements. Under the new system, the related tax deductions will be abolished, at least for direct federal tax (see also UP|DATE, December 2025).

Should You Buy Now?

Anyone purchasing residential property this year or next will still benefit in the short term from tax deductions on mortgage interest. Once the new system comes into force, however, this tax advantage will disappear.

It is therefore essential to plan your property financing with the long-term rules in mind.

Should You Wait Before Buying?

The new legislation provides transitional relief for first-time buyers purchasing owner-occupied homes after the reform comes into effect.

They will continue to be able to deduct part of their mortgage interest for up to ten years, depending on their individual circumstances, with deductions of up to CHF 10,000 per year. However, the deductible amount will decrease by 10% each year.

While this measure may ease the initial financial burden, it does not provide a long-term tax benefit.

Should You Increase Contributions to the Renovation Fund?

Owners of condominium units should consider reviewing the level of their contributions to the building's renovation or maintenance fund this year and next, increasing them where appropriate.

In most Swiss cantons, these contributions remain tax-deductible until the new rules come into force, provided they are used for value-preserving maintenance of the shared property.

Should You Pay Down Your Mortgage?

Once the tax incentive disappears, carrying mortgage debt becomes less attractive. This strengthens the case for repaying part or all of the mortgage.

At the same time, homeowners should carefully consider whether they can afford to tie up that capital over the long term and forgo the investment returns it could otherwise generate.

In the worst-case scenario, someone may reach retirement owning a fully paid-off home but lacking sufficient income or liquid savings to meet their ongoing financial needs.

Source: Treuhand | Suisse