Abolition of imputed rental value: What owners need to know now.

For many owners, this means that the tax burden depends on the amount of the mortgage and the maintenance costs claimed – a calculation that is particularly significant in the case of rising interest rates and renovation work. A fundamental change to the system is now on the cards. On September 28, 2025, Switzerland will vote on a constitutional basis that will allow the cantons to introduce a property tax on second homes. Only if this bill is adopted can the federal law already passed by parliament, which provides for the abolition of the imputed rental value, come into force.

Abolition of imputed rental value and new rules for deductions

The key points are clear: the imputed rental value would be abolished, maintenance costs would no longer be deductible at federal level (cantons can make extraordinary new provisions for certain areas such as monument preservation or energy and environmental protection measures). In future, debt interest could only be deducted proportionately (rented property values in relation to total assets) – i.e. only for rented assets. A general debt interest deduction for owner-occupied homes will no longer apply. A new first-time buyer deduction would come into play, which would provide relief for first-time buyers in the first ten years: a maximum of CHF 10,000 for married couples and CHF 5,000 for single people in the first year, decreasing on a declining scale thereafter. For second properties – such as vacation homes – the cantons would be given the power to introduce a new property tax, the amount and structure of which could be regulated differently from canton to canton.

What does this mean in concrete terms for owners?

Anyone who has largely amortized their home and no longer makes any major investments should benefit from the abolition, as the imputed rental value no longer applies without any major deductions being lost. However, anyone who is heavily in debt and regularly claims high maintenance costs must expect a higher tax burden. For vacation properties, it all depends on how the cantons use their new powers. One thing is clear: the new system will not come into force overnight, as the political process takes time. Nevertheless, it is worth rethinking your own financial strategy now, planning maintenance work with foresight and critically examining mortgage structures. In this way, you will remain prepared, regardless of the outcome of the vote in the fall. For example, it can be assumed that construction prices will rise sharply for 2-3 years if the vote is accepted, as everyone will still want to renovate.

Our recommendations for action

• Plan maintenance: When the reform comes into force, maintenance deductions will no longer apply (federal government, usually also cantons). Check major value-preserving work immediately – prices and capacities will increase significantly before the reform comes into force.
• Check mortgage strategy: Without a general debt interest deduction, it is worth taking a sober look at amortization, terms and interest rate mix. However, there is no one-size-fits-all rule – cash flow, interest rate risk and life planning are decisive factors that need to be weighed up.
• Watch vacation properties: Watch out for the cantonal signals on future property tax. Depending on the canton, this can significantly increase the net holding costs.
• First-time buyers in mind: Potentially benefit from the first-time buyer deduction; structure financing in such a way that the interest burden in the first few years is sensibly cushioned by the deduction.
• Landlords (investment properties): For rented properties, maintenance and management costs as well as interest (but only proportionately in relation to the total assets) remain deductible – Separate your asset allocation of private and business assets clearly.

For many owners, this means that the tax burden depends on the amount of the mortgage and the maintenance costs claimed – a calculation that is particularly significant in the case of rising interest rates and renovation work. A fundamental change to the system is now on the cards. On September 28, 2025, Switzerland will vote on a constitutional basis that will allow the cantons to introduce a property tax on second homes. Only if this bill is adopted can the federal law already passed by parliament, which provides for the abolition of the imputed rental value, come into force.

Abolition of imputed rental value and new rules for deductions

The key points are clear: the imputed rental value would be abolished, maintenance costs would no longer be deductible at federal level (cantons can make extraordinary new provisions for certain areas such as monument preservation or energy and environmental protection measures). In future, debt interest could only be deducted proportionately (rented property values in relation to total assets) – i.e. only for rented assets. A general debt interest deduction for owner-occupied homes will no longer apply. A new first-time buyer deduction would come into play, which would provide relief for first-time buyers in the first ten years: a maximum of CHF 10,000 for married couples and CHF 5,000 for single people in the first year, decreasing on a declining scale thereafter. For second properties – such as vacation homes – the cantons would be given the power to introduce a new property tax, the amount and structure of which could be regulated differently from canton to canton.

What does this mean in concrete terms for owners?

Anyone who has largely amortized their home and no longer makes any major investments should benefit from the abolition, as the imputed rental value no longer applies without any major deductions being lost. However, anyone who is heavily in debt and regularly claims high maintenance costs must expect a higher tax burden. For vacation properties, it all depends on how the cantons use their new powers. One thing is clear: the new system will not come into force overnight, as the political process takes time. Nevertheless, it is worth rethinking your own financial strategy now, planning maintenance work with foresight and critically examining mortgage structures. In this way, you will remain prepared, regardless of the outcome of the vote in the fall. For example, it can be assumed that construction prices will rise sharply for 2-3 years if the vote is accepted, as everyone will still want to renovate.

Our recommendations for action

• Plan maintenance: When the reform comes into force, maintenance deductions will no longer apply (federal government, usually also cantons). Check major value-preserving work immediately – prices and capacities will increase significantly before the reform comes into force.
• Check mortgage strategy: Without a general debt interest deduction, it is worth taking a sober look at amortization, terms and interest rate mix. However, there is no one-size-fits-all rule – cash flow, interest rate risk and life planning are decisive factors that need to be weighed up.
• Watch vacation properties: Watch out for the cantonal signals on future property tax. Depending on the canton, this can significantly increase the net holding costs.
• First-time buyers in mind: Potentially benefit from the first-time buyer deduction; structure financing in such a way that the interest burden in the first few years is sensibly cushioned by the deduction.
• Landlords (investment properties): For rented properties, maintenance and management costs as well as interest (but only proportionately in relation to the total assets) remain deductible – Separate your asset allocation of private and business assets clearly.

“The abolition of the imputed rental value has many facets and there are winners and losers for both owners and tenants.”

Claude Ginesta, CEO