Swiss Tax Reform. Why Homeowners Should Pay Attention Now

With Switzerland set to abolish the imputed rental value, what does this mean for homeowners in practical terms? To help us make sense of it all, we turned to our go-to translator of tax language, Alex Clarke at Albatross Group, to break down what we know so far and what to consider next.

Real Estate Update: Abolition of the Imputed Rental Value

What it means for homeowners in Switzerland

On September 28, 2025, Swiss voters approved the abolition of the imputed rental value with 57.7% voting in favour. The reform is expected to come into force no earlier than January 1, 2028.

It's important to note that at this stage, only the federal direct tax component has been approved. The cantons, including Vaud, still need to to determine their own position regarding the exact tax treatment at the cantonal level.

Does this apply to you?

This concerns you if you:

• Own your primary residence in Switzerland

• Are planning to buy a home

We are not covering rental properties here. A separate update will follow once more information is available.

Key words to understand

The imputed rental value is a notional income that homeowners must declare for the home they live in, as if they were renting it out. Even though no rent is received, this amount is added to taxable income.

The idea behind it was to create equal tax treatment between homeowners and tenants.

Who benefits most?

• Homeowners of relatively new properties, since they incur very low maintenance costs.

• New buyers benefit from the planned deduction of debt interest for first-time purchasers

• Homeowners who have largely repaid their mortgage, particularly retirees.

Who may be disadvantaged?

• Owners of older properties in need of renovation works

• Those planning substantial renovation works after 2028

What changes?

Mortgage interest deduction

Debt interest will only be deductible on a limited basis, through a special deduction for first-time buyers of their primary residence.

• Interest will be capped at CHF 10,000 per year for a couple in the first year

• Reduced on a linear basis each year, over a ten-year period

Renovation and maintenance costs

These will no longer be tax-deductible for owner-occupied properties, except for costs relating to:

• Energy-saving

• Demolition

All the changes mentioned above apply at the federal level. The cantons have not yet clarified the exact deductions that will be permitted at the cantonal level.

What to consider now?

For planned renovations, homeowners should quickly assess whether it makes sense to bring certain works forward, in order to still benefit from tax deductions during this transition period.

Final thoughts

If you own both rental property and your own home, running a financial simulation is the best way to understand the potential impact of the reform. Keep in mind that it is still too early to assess the full consequences, as the cantons have not yet fully defined the exact rules. For now, if you are planning renovations, it may be wise to carry them out while deductions are still available.

At Albatross, we can help you identify which renovation expenses remain tax-deductible and in planning strategically during this transition period.

Alex Clarke @ Albatross