Real estate and retirement

Abolition of the imputed rental value: what this will mean for property owners starting in 2028

For nearly a century, homeowners occupying their own property have been required to declare an imputed rental value, meaning a theoretical rent corresponding to the income their property could generate based on market conditions and cantonal rules. The original purpose was to ensure equal tax treatment between tenants and homeowners.

Until now, several deductions have also been available:

• deductions for mortgage interest;

• deductions for maintenance expenses and renovation works.

However, the vote of September 28, 2025, confirmed the abolition of the imputed rental value for all owner-occupied homes, including secondary residences, and introduces changes to the deductibility rules for rental properties. The entry into force is expected no earlier than 2028.

The direct impacts on several tax mechanisms are as follows:

• No more imputed rental value to declare: Owners of primary and secondary residences will no longer have to declare fictitious income related to the private use of their property.

• End of mortgage interest deductibility: Mortgage interest will no longer be deductible for primary and secondary residences occupied for private use.

• For rental properties: Mortgage interest proportional to the ratio between the value of the rented property and the taxpayer’s total wealth will remain deductible.

• For first-time buyers: Mortgage interest related to a primary residence will remain deductible during the first 10 years of ownership on a declining basis, subject to an annual cap of CHF 10,000 for married couples and CHF 5,000 for single taxpayers. This cap will decrease by 10% each year.

• End of deductions for maintenance, renovation, and energy-efficiency expenses: At the federal level, these deductions will disappear. Cantons may maintain certain targeted deductions, particularly for energy-efficiency improvements, but this will depend on local decisions. Maintenance costs for rental properties will remain deductible.
  
  

Practical consequences for property owners

The reform will result in a significant reduction in tax advantages:

• Renovation and energy-efficiency improvements will become much less attractive from a tax perspective once the reform comes into force;

• Highly leveraged owners will be disadvantaged, as the abolition of the imputed rental value may not compensate for the loss of mortgage interest deductibility;

• Owners with low or no debt may benefit from tax relief, as they will no longer have to declare an imputed rental value and will be only marginally affected by the loss of mortgage interest deductibility.

If you are planning major renovations, energy-efficiency upgrades, or renewing your mortgage, it may be fiscally advantageous to complete these steps before 2028, while current deductions remain available.

This also means that from 2028 onward, as property-related deductions may disappear, voluntary buy-ins into the second pillar and contributions to pillar 3a will become key tax optimization tools to reduce your taxable income while strengthening your long-term financial security.