The announced end of imputed rental value in Switzerland

For nearly a century, homeowners living in their own property have been required to declare an imputed rental value – a notional income corresponding to the use of their home. Introduced in the 1930s as a crisis measure, this rule was intended to ensure equal treatment with tenants, who pay their rent out of already-taxed income.

In practice, the tax authorities consider that a homeowner “grants themselves rent”. This value, set in most cantons at around 60% of market rents, varies according to several criteria: location, year of construction, condition, or property features.

A burden under scrutiny

For retirees who have repaid their mortgage, this taxation can become heavy: few or no deductible interest payments, yet an imputed rental value to pay despite a modest pension. By contrast, highly indebted households have so far benefited from generous interest deductions – which long fuelled the perception that the system encouraged indebtedness.

The reform project

Parliament and the Federal Council now intend to abolish the imputed rental value. In return, cantons could introduce a real tax on second homes. This measure, which requires an amendment to the Constitution, will be subject to a popular vote on 28 September 2025.

The reform also provides for:

• the abolition of maintenance deductions for primary residences, while keeping them for rental properties;

• a sharp reduction in interest deductions, with a limited transitional regime for new homeowners;

• the maintenance of deductions for listed buildings and, depending on the canton, for energy-efficient renovations.

Expected effects

The consequences will depend heavily on mortgage rates:

• with low rates, lightly indebted homeowners would benefit, while young households with loans would be penalised;

• with high rates, the abolition of interest deductions would be less costly for the state, which could even record a fiscal gain.

At this stage, the Federal Council estimates a shortfall of around CHF 2 billion per year, though projections remain highly uncertain.

Political debate

Supporters highlight greater fairness and less administrative complexity. Opponents fear heavier burdens for new buyers, a slowdown in energy renovations, and an unequal distribution of benefits in favour of wealthy households.

Conclusion

The September 2025 vote will be decisive: if approved, the current system will gradually be replaced by a new cantonal tax on second homes. A reform that could benefit some homeowners, disadvantage others, and durably reshape housing taxation in Switzerland.

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