How do I tax my owner-occupied property in Switzerland?

Tax imputed rental value as fictitious income

Anyone who owns a self-occupied property must the so-called Imputed rental value tax as fictitious income. At the same time can Mortgage interest and maintenance costs be deducted from taxes.

What is the imputed rental value?

definition

The imputed rental value corresponds to a fictitious rent that owners could earn when renting out their residential property. Self-users must tax this value as income.

Legal basis

Article 21 of the Federal Direct Federal Tax Act states that income from immovable property is taxed. This also includes “the rental value of real estate or parts of property that are available to the taxpayer for personal use on the basis of ownership or a free right of use.”

tax system

Expressed in Swiss francs, the imputed rental value corresponds to around 60 to 70 percent of the amount that a tenant would have to pay for the residential property per year. The Federal Supreme Court set the imputed rental value to at least 60 percent and maximum 70 percent The usual market rent is set.

Calculation of imputed rental value

basic principle

According to the Federal Supreme Court, the imputed rental value must be at least 60 percent and a maximum of 70 percent of the normal market rent. It is determined by the cantonal tax authority.

Cantonal differences in calculation

Zurich Canton

In the Canton of Zurich, the imputed rental value is calculated differently depending on the type of property:

• single-family homes: 3.5 percent of the wealth tax value
• flats: 4.25 percent of the wealth tax value
• Self-used apartments in apartment buildings: 70 percent of market rents

Canton of Bern

The imputed rental value is determined individually for each plot of land as part of the official valuation. First, the so-called protocol rental value is determined on the basis of the individual characteristics of the property, which is then adjusted to the rent level using a comparative process.

Canton of Lucerne

The imputed rental value amounts to 70 percent of market rents.

Canton of St. Gallen

The imputed rental value is 70 percent of the usual market rent.

Canton of Thurgau

The imputed rental value for owner-occupied properties is 60 percent of the indexed rental value.

Canton of Solothurn

The imputed rental value is 8 to 11 percent of the cadastral value of buildings of average construction. For buildings of an above-average construction type, the imputed rental value is determined individually.

Evaluation factors

The imputed rental value is determined by the competent cantonal tax authority. When making its estimate, this takes into account criteria such as:

• living space
• Lage
• Year of construction
• construction
• fitment
• Condition of the property

Tax deductions

Mortgage interest

You can deduct mortgage interest in full from taxable income. With direct federal tax, mortgage interest of up to CHF 50,000 can be deducted from taxable asset entries, which is almost never achieved in practice.

maintenance costs

In most cantons, maintenance costs can be either:

• package (as a percentage of the imputed rental value) or
• Effectively be specified (with supporting documents)

Deductible maintenance costs

• Repairs and renovations
• maintenance work
• administrative costs
• insurance premiums (building and household insurance)
• incidentals (as long as not used by yourself)

Non-deductible costs

• Value-adding investments (new kitchen, annex)
• Private additional costs (electricity, gas, water for own consumption)

Practical example from the source

Starting position

Example of a homeowner whose property is worth 1 million francs. His taxable income of 150,000 francs is increased by the imputed rental value.

Calculation when indebtedness is high

Owner-occupied property, market value 1 million Fr., mortgage 800,000 Fr. at 2% interest, marginal tax rate 35%:

Imputed rental value: +18,000 CHF
Mortgage interest (800,000 × 2%): -16,000 CHF
Maintenance costs: -2'800 CHF
Net additional charge: +3,200 CHF
Additional taxes (35%): +1,120 CHF

Calculation when indebtedness is low

Homeowners who have heavily repaid their mortgage or even paid off their mortgage in full are more disadvantaged. If the mortgage is only 200,000 francs, in our example, the homeowner pays over 5,000 francs more in tax each year.

Imputed rental value: +18,000 CHF
Mortgage interest (200,000 × 2%): -4,000 CHF
Maintenance costs: -2'800 CHF
Net additional charge: +11'200 CHF
Additional taxes (35%): +3'920 CHF

Who is affected?

main residence

The imputed rental value must be taxed in the case of:

• Self-occupied residential property
• Free use by relatives in the same household (spouse and children)
• beneficiaries who use the property free of charge
• Residents who use the property free of charge

Second homes and holiday homes

Holiday homes and apartments must also be taxed. Since January 1, 2011, only the higher rental value has been used for direct federal tax. The higher imputed rental value is intended to serve as an incentive to rent out the holiday apartment you do not own.

Vacant properties

Homeowners who take up a job in another city, for example, must continue to tax the imputed rental value for their house, even if they no longer live there. There are just two exceptions:

1. You can make it credible that you tried to sell or rent the property
2. The property is in such poor condition that it can neither be sold nor rented

Hardship regulations

Cantons with hardship clauses

In the cantons Geneva, Graubünden, Lucerne, Obwalden, Schaffhausen, St. Gallen, Vaud and Zurich Are there hardship clauses for low-income homeowners, such as pensioners.

Conditions for hardship cases

If the imputed rental value exceeds a certain percentage (usually a third) of income, it is reduced. In Lucerne and St. Gallen, however, it must not fall below 60 percent.

Reduction of imputed rental value

underuse

If housing requirements change and spaces remain unused, you may be able to claim a lower imputed rental value. In practice, this is possible when a child moves out or in the event of a divorce.

Requirements for reduction

• Spaces must actually no longer used will
• Not used as a guest room or craft room
• For Holiday apartments Consists no claim on reduction

Objection against imputed rental value

The tax authorities periodically reassess the imputed rental value. In the event of an increase, you have the option of objecting:

• Objection is free
• Court proceedings can be expensive (Expertise costs several thousand francs)
• Chances of success are limited, particularly in the case of general market adjustments

Tax Implications

Who benefits from the current system?

This tax system generally favors homeowners who are heavily indebted because they can deduct more interest on debt.

Who is disadvantaged?

Homeowners whose combined debt interest and maintenance costs are lower than the imputed rental value. Their income taxes are higher than they would be if they didn't have a house.

Interest level dependency

However, in times of very low mortgage interest rates, this is usually the case even for heavily indebted homeowners.

Additional taxes on real estate

multiple taxation

Residential property is taxed several times in Switzerland:

• Wealth tax: The value as taxable asset
• Imputed rental value: As taxable income
• Real estate tax: More than half of the cantons collect 0.1 to 0.3 percent of the property value
• Real estate gains tax: When selling at a profit

Deductions as compensation

In return, the following can be deducted:

• Mortgage liabilities of assets
• Mortgage interest from income
• maintenance costs from income

Planned abolition of imputed rental value

Current status (2025)

On December 20, 2024, both the Council of States and the National Council spoke out in favour of an end to imputed rental value taxation. On September 28, 2025, Swiss voters will vote on the abolition of imputed rental value.

Abolition conditions

The abolition is linked to the introduction of a cantonal property tax on second homes. The system change will only take effect if both proposals are accepted.

Effects of the planned reform

If the proposal is accepted:

• Loss of imputed rental value for owner-occupied residential property at the main residence
• secondary properties remain taxable
• New deduction limits for mortgage interest
• Entry into force at the earliest 2026, more like 2027

optimization strategies

Short-term measures

1. Make use of all deductions: Claim mortgage interest and maintenance costs in full
2. Optimize maintenance work: Timing of repairs and renovations
3. Check individual evidence: Compare effective costs versus flat rate
4. Documenting underuse: In case of changed living conditions

Medium-term strategies

1. mortgage strategy: Optimum indebtedness taking into account sustainability
2. Energetic renovations: Both deduction and increase in value
3. Professional advice: Tax advisor for complex situations

Long-term planning

1. Payback strategy: Balancing direct versus indirect amortization
2. Time of sale: Take real estate gains tax into account
3. succession planning: Tax-optimal transfer to the next generation

Avoid common mistakes

documentation

• Incomplete supporting documents: Collect all maintenance costs systematically
• Wrong categorization: Distinguish between increase in value versus maintenance
• Missing evidence: Especially when it comes to effective costs

tax planning

• Ignore timing: Optimally distribute repairs and investments
• Flat vs. effective: Choose the best option every year
• Interest rate strategy: Balancing tax versus financial optimization

Practical tips

document management

• Digital capture: Apps and software for cost tracking
• categorization: Clear separation between maintenance and increase in value
• Long-term archiving: 10-year storage obligation

annual planning

• Cost forecast: Budget for maintenance work
• Tax optimization: Spread spending over favourable years
• Professional assistance: Seek advice in good time

conclusion

Owner-occupied real estate in Switzerland is taxed by Imputed rental value as fictitious income (60-70% of market rent), where Mortgage interest and maintenance costs can be deducted.

Key points:

• Imputed rental value: Fictitious income based on market rent
• deductions: Mortgage interest and maintenance costs are fully deductible
• Cantonal differences: Different calculation methods
• Discrimination: Especially with low interest rates and low debt
• future: Possible abolition following a referendum in September 2025

The current system prefers heavily indebted owners and underprivileged those with low debt or paid off mortgages. Die planned abolition could bring about fundamental changes, but is still subject to the referendum.