The abolition of imputed rental value in Switzerland is reshaping property taxation. Discover the impacts and strategies to consider today

The scheduled abolition of imputed rental value marks a turning point in Swiss real estate taxation. Behind this reform, approved in September 2025, lies a redistribution of the balance between taxpayers. In addition to abolishing imputed rental value, the reform also ends deductions related to mortgages and maintenance costs, while allowing cantons to introduce a tax on second homes. By 2028, some households will gain significantly, while others will need to reassess their financial strategies. Here is an overview of the implications and the adjustments to consider today.

A contested tax on its way out

Taxing a notional income on a property one occupies oneself: that was the long-debated principle of imputed rental value. A system unique in Europe, it aimed to prevent a tax distortion between owners and tenants, while encouraging the maintenance of the housing stock through targeted deductions.

On 28 September 2025, Swiss citizens approved the abolition of this regime. The reform also eliminates tax deductions linked to mortgage interest and maintenance or renovation costs. However, an exception remains for first-time buyers, who will still be able to partially deduct their interest during the first ten years following their purchase.

Another important point: investment properties are not affected. Their owners will continue to be taxed on actual rental income and to deduct the related expenses, in line with a conventional tax framework.

Delayed entry into force, but immediate decisions

Although the reform will not come into effect before 2028, it already raises practical questions. The balance between debt repayment, investment and tax optimisation needs to be reconsidered. Current incentive mechanisms are set to disappear, meaning wealth strategies must adapt accordingly.

Diverging effects depending on the profile

The reform will affect taxpayers differently, depending on their level of indebtedness, life situation and time horizon.

Welcome relief for some

Take the case of a retired couple, long-standing homeowners, who have repaid their mortgage. Today, they still face a tax burden linked to the imputed rental value of their home, without benefiting from deductions that have been gradually abolished.
Tomorrow, the disappearance of this fictitious tax will represent a net gain, without impacting their financial capacity.

A reversal of logic for others

Conversely, young homeowners with high levels of debt will face greater complexity. A couple who recently financed 80% of their home through a mortgage, and who plan energy efficiency improvements, risk seeing their net tax burden rise, as deductions for debt and renovation will disappear. Their tax treatment will now resemble that of debt-free owners – but with a very real mortgage to repay.

Should debt be repaid more quickly?

In this context, some might be tempted to repay their mortgage more aggressively to reduce their financial burden. This approach, however, requires nuance.

The fiscal incentive for debt is weakening, but the real cost of debt remains low in an environment of low or moderately rising interest rates. Locking up capital in repayment is not necessarily the most judicious choice, especially if that capital can be deployed more efficiently elsewhere.

Pension planning as a powerful alternative

One of the first levers to consider remains pension-related savings. Buy-ins to occupational pensions (LPP) or contributions to the tied 3rd pillar still reduce immediate tax liabilities while strengthening long-term financial security. By comparison, repaying inexpensive debt generates no return and reduces financial flexibility.

Building capital today, repaying tomorrow

Another strategy: retain low-cost debt while investing capital in a diversified manner. This can yield higher overall returns than immediate repayment, while preserving flexibility to respond to future interest-rate changes.

For example, a couple holds a CHF 500,000 mortgage fixed at 1.5% for ten years. At the same time, they have a CHF 400,000 portfolio generating a net return of 3% per year. Rather than repaying immediately, they allow this capital to grow. In ten years, if rates have risen sharply (4–5%), they could repay their mortgage in full using the portfolio. They would have benefited from a favourable return differential while maintaining room for manoeuvre.

2028 in sight: making use of the transition period

As the reform has not yet entered into force, the current tax mechanisms remain applicable until 2028. This transitional period offers a window of opportunity for those who still wish to benefit from deductions linked to:

• Significant renovation or maintenance work
• An adapted debt structure
• Wealth or inheritance planning designed with the future tax environment in mind

Anticipate rather than react

The abolition of imputed rental value is part of a broader movement to simplify and rebalance the tax system. While some households will automatically benefit, others will need to rethink their entire approach to financing, investment and pension planning.

In this context, it is essential not to wait until 2028 to act. An individualised analysis, integrating tax, wealth and inheritance aspects, often makes it possible to take more coherent and sustainable decisions.