Reform of the imputed rental value: what property owners need to know

In Switzerland, the taxation of imputed rental value may soon become a thing of the past. After years of parliamentary debate, a federal reform is now ready to be put to a popular vote. It proposes to abolish this controversial tax for homeowners who live in their own property, whether as a main or secondary residence. This reform would have a direct impact on hundreds of thousands of taxpayers, while leaving considerable leeway to the cantons.

In practical terms, the proposed reform would remove the imputed rental value as taxable income at the federal level. In exchange, most of the currently permitted deductions would also be abolished: maintenance costs, renovations, mortgage interest and energy-efficiency investments would no longer be deductible at the federal level. However, cantons would remain free to allow certain deductions—particularly for ecological renovations—or to create a specific tax on secondary residences.

The effect of the reform will vary greatly depending on each homeowner’s personal situation, as well as on the level of mortgage interest rates. When rates are low, as they have been in recent years, the reform tends to reduce the net tax burden. This is especially true for owners with little or no debt, who currently pay tax on a notional income without benefiting from significant deductions. Conversely, if interest rates rise, the loss of interest deductibility could weigh more heavily, particularly on highly indebted households. The same applies to those purchasing an older property with the aim of renovating it.

Take the example of a couple who have owned their home for a long time and have partially repaid their mortgage: the abolition of the imputed rental value would lead to a net tax gain, with no significant impact on their ongoing expenses. But for a younger household, with a high mortgage and a tight budget, the benefits of the reform would be less obvious—or even non-existent—if interest rates rise significantly.

Beyond the immediate tax implications, this reform highlights a deeper reality: the need to structure one’s property assets strategically, regardless of the rules in force at any given time. What does not change, even with the reform, is that a mortgage can still be a worthwhile option—provided it is integrated into a comprehensive wealth strategy.

As long as available liquidity can be invested in solutions that yield a net return higher than the mortgage rate, it may make sense to maintain the loan. The key lies in the ability to invest wisely, in order to build up a strategic reserve that could be used to partially or fully repay the loan if rates increase.

This logic of anticipation, flexibility and performance is what drives efficient wealth management. Whether the reform is adopted or not, it presents an ideal opportunity to take stock: level of indebtedness, amortisation choices, balance between liquid and property assets, inheritance planning… These are all levers worth reassessing with the support of a specialised adviser.