Imputed rental value ends in 2029: Who wins and who loses?
From 1 January 2029, imputed rental value will be abolished for owner-occupied primary and secondary properties in Switzerland. At the same time, important tax deductions for maintenance costs and mortgage interest will disappear. Whether owners actually benefit therefore depends mainly on their level of debt, mortgage interest rates and planned renovations.
By Nikita von Niederhäuser , UrbanHome real estate expert Updated on · Reading time: approx. 8 minutes
What changes from 1 January 2029?
Today, people who live in their own house or apartment must declare a so-called imputed rental value as income. Put simply, this is the amount the property could theoretically generate if rented out.
In return, owners can currently deduct mortgage interest and certain maintenance expenses from taxable income, among other things. This system will change fundamentally from 2029.
| Category | Until the end of 2028 | From 1 January 2029 |
|---|---|---|
| Imputed rental value | Taxed as income | Abolished for owner-occupied primary and secondary properties |
| Maintenance expenses | Partly deductible as a lump sum or based on actual expenses | No longer deductible for owner-occupied residential property |
| Mortgage interest | Deductible within the applicable limits | Generally no longer deductible for exclusively owner-occupied residential property |
| Energy-efficiency renovations | Deductible depending on the measure and the canton | No longer deductible for direct federal tax; cantons may temporarily retain deductions |
| Rented properties | Maintenance costs and debt interest partly deductible | Maintenance costs remain deductible; debt-interest deductions are limited proportionately |
Who is likely to benefit?
The property's value is not the only decisive factor. The size of the mortgage, prevailing interest rates and deductions claimed in the past are particularly important.
Owners without a mortgage
Owners who have completely repaid their mortgage previously had little or no debt interest to deduct, but still had to pay tax on imputed rental value. This group is likely to see significant relief.
Owners with a small remaining mortgage
Even with a small remaining mortgage, the abolished imputed rental value is often greater than the lost mortgage-interest deduction. This is particularly true when mortgage rates are low.
Many retired homeowners
Retirees have often repaid much of their mortgage. At the same time, imputed rental value can represent a substantial amount relative to their pension income. The reform will therefore provide relief for many older owners.
Owners of newer properties
Anyone who does not anticipate major repairs or renovations in the coming years will be less affected by the loss of maintenance deductions.
Who could lose out under the reform?
Highly indebted homeowners
People with large mortgages lose correspondingly substantial debt-interest deductions. If mortgage rates rise, this disadvantage may outweigh the abolition of imputed rental value.
Owners of properties needing renovation
Repairs, renovations and value-preserving work on owner-occupied properties will no longer be deductible as maintenance costs. This matters especially for older houses.
Young buyers with high financing needs
Young households often finance a home with a relatively large mortgage. The temporary first-time-buyer deduction can reduce the burden, but does not necessarily offset it in full.
Owners of second homes
Imputed rental value will also disappear for owner-occupied second homes. However, cantons may introduce a special property tax to partly compensate for lost tax revenue.
The level of mortgage interest rates also matters
Calculations by the Swiss Federal Tax Administration show how strongly the result depends on average mortgage rates. The analysis concerns direct federal tax and data from four cantons. It is therefore not an individual tax forecast, but indicates the broad direction.
| Mortgage interest rate | Share of winners | Share of losers |
|---|---|---|
| 1.5 percent | approx. 82 percent | approx. 18 percent |
| 2.5 percent | approx. 70 percent | approx. 30 percent |
| 3.0 percent | approx. 61 percent | approx. 39 percent |
| 3.5 percent | approx. 51 percent | approx. 49 percent |
| 4.0 percent | approx. 43 percent | approx. 57 percent |
At low interest rates, a clear majority is therefore likely to benefit. At mortgage rates of around 3.5 percent, winners and losers are roughly balanced. At even higher rates, most owners could be worse off.
The actual tax impact also depends on the canton of residence, taxable income, imputed rental value, mortgage amount and previous maintenance deductions.
Special provision for first-time buyers
People buying their first home in Switzerland and occupying it as their primary residence can continue to claim a limited debt-interest deduction for ten years.
- For married couples, the initial maximum amount is CHF 10,000 per year.
- For unmarried taxpayers, the initial maximum amount is CHF 5,000 per year.
- The maximum deduction decreases each year by ten percent of its original ceiling.
- After ten years, the first-time-buyer deduction ends completely.
This provision is intended to prevent young buyers from being particularly disadvantaged immediately by the system change. However, with large mortgages and rising interest rates, actual interest payments may exceed the permitted deduction.
What does the reform mean for renovations?
Today, owners of owner-occupied properties can choose between a standard maintenance deduction and a deduction for actual value-preserving expenses. From 2029, this deduction will disappear at federal, cantonal and municipal level.
Anyone planning major roof repairs, facade renovations, replacement heating or other extensive work should therefore review the timing early. Renovating before 2029 may be more tax-efficient, provided the work is necessary and qualifies for deductions under the applicable rules.
However, a renovation should not be brought forward solely because of a tax deduction. The building's condition, financing, available subsidies and cantonal tax practice are equally important.
Deductions for energy-saving and environmentally friendly investments will be abolished for direct federal tax. Cantons may maintain such deductions for a limited time. The rules may therefore differ from canton to canton from 2029.
What applies to holiday homes and second residences?
Imputed rental value will be abolished not only for primary residences but also for owner-occupied second properties. This affects, for example, holiday apartments in Valais, Graubünden, Ticino and the Bernese Oberland.
However, cantons will be able to introduce a special property tax on predominantly owner-occupied second homes. Whether such a tax is levied, and at what rate, will be decided by each canton under its legislation.
Second-home owners will therefore only be able to calculate reliably whether they benefit once the rules in the canton where the property is located are known.
steps to prepare for 2029
Determine your current tax burden: Compare the imputed rental value, debt interest and maintenance deductions in your latest tax return.
Review your mortgage: Calculate the likely remaining mortgage balance and annual interest costs in 2029.
Plan renovations: List necessary maintenance work up to 2029 and prioritise it with a specialist.
Monitor cantonal rules: Potential energy-efficiency deductions and any special tax on second homes are particularly important.
Calculate your individual impact: For large mortgages, multiple properties or extensive renovations, professional tax advice may be worthwhile.
Your mortgage debt will matter more than the property value
Abolishing imputed rental value primarily relieves owners who have largely paid off their mortgage and claim only modest maintenance deductions. Many retirees are therefore likely to be among the winners.
The picture is different for heavily indebted households. They lose much of their previous debt-interest deduction and may face a higher tax burden if mortgage rates rise. Owners of older buildings requiring renovation must also account for the loss of maintenance deductions.
There is therefore no universal answer to who wins and who loses. What is certain is that from 2029, a low mortgage will become significantly more attractive from a tax perspective than under the current system.
Frequently asked questions about abolishing imputed rental value
The reform takes effect on 1 January 2029. From then on, imputed rental value will no longer be taxed as income for owner-occupied primary and secondary properties.
Homeowners with a small or fully repaid mortgage tend to benefit. This includes many retired homeowners.
Generally not for exclusively owner-occupied residential property. Exceptions apply in particular to first-time buyers and on a proportional basis to rented or leased properties.
The general maintenance deduction will be abolished for owner-occupied properties. Cantons may temporarily continue to allow specific deductions for energy-efficiency measures.
Rental income remains taxable and related maintenance costs remain deductible. The debt-interest deduction is calculated according to the ratio of rented or leased property to total assets.
No. Although imputed rental value disappears, the property will generally remain part of taxable wealth. The canton where it is located may also introduce a special property tax on predominantly owner-occupied second homes.
General overview
This article provides a general overview of the Swiss home ownership tax reform. It is not a substitute for individual tax or legal advice. The actual burden depends on personal circumstances and cantonal implementation.