An article by Ferax from ExpertInfo, Issue 1 - 2026

Background

Previously, a fictitious income in kind, in the form of the imputed rental value, was taxed on owner-occupied residential property at both the federal and cantonal levels. In return, costs for value-preserving maintenance, energy-saving measures, and debt interest could be deducted from taxable income.

With the popular vote on September 28, 2025, Swiss voters approved the reform of residential property taxation. This will result in far-reaching changes, which will come into force no earlier than 2028.

What is changing

The imputed rental value will no longer be considered taxable income for all owner-occupied properties (primary and secondary residences). To compensate for the loss of revenue, cantons are free to introduce a property tax on predominantly owner-occupied secondary residences.

Value-preserving maintenance costs for owner-occupied properties can no longer be deducted. Investments in energy-saving or environmental protection measures (e.g., photovoltaic systems or energy-efficient renovations) will also no longer be deductible for direct federal tax purposes. However, cantons may continue to provide for such deductions.

As long as the previous system applies, contributions to the renovation fund can, under certain conditions and depending on cantonal regulations, be considered maintenance costs. With the elimination of the maintenance deduction for owner-occupied properties, this deduction option will also cease to apply.

The deduction for debt interest will be significantly restricted in principle:

• For owner-occupied residential property (mortgage interest), the deduction will generally be eliminated.
• Taxpayers without properties are also affected, as they will no longer be able to deduct debt interest (e.g., private loans, small credits, etc.).

To somewhat facilitate home purchases, an exception applies: For up to ten years after acquisition, debt interest up to a maximum of CHF 10,000 (married couples) and CHF 5,000 (single individuals) can be deducted. The deduction decreases linearly by ten percent annually over ten years.

Owners of investment properties will also feel direct effects on their future tax burden. Debt interest can now only be claimed up to the proportion of the immovable assets of the rented properties to the total assets (proportional-restrictive method).

Outlook

The abolition of the imputed rental value marks a system change in Swiss tax policy. The effective date has not yet been definitively set; January 1, 2028, is considered the earliest possible date. The Federal Council will determine the exact effective date during 2026, after consulting with the Conference of Cantonal Finance Directors (FDK).

The cantons retain leeway in implementation, particularly regarding the introduction of a property tax on secondary residences and any deductions for energy-saving or monument preservation measures.

Until the new provisions come into force, it may be advisable to bring forward planned value-preserving maintenance work and make contributions to the renovation fund to still benefit from the existing deduction options. Furthermore, owners should review their financing and, especially for rented properties, analyze the effects of the future limitation on debt interest deductions early.

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