Imputed Rental Value in Switzerland: What Does It Mean and How Is It Calculated?

The imputed rental value (Eigenmietwert) is one of the distinctive features of the Swiss tax system and has been a subject of ongoing debate. Anyone who lives in their own apartment or house must declare a fictional income – the imputed rental value – as taxable income. The purpose of this rule is to offset the tax advantage of living rent-free.

This article explains how the imputed rental value works, how it is calculated, what differences exist between cantons, and what the approved abolition means for property owners.

Important note: On 28 September 2025, the Swiss electorate approved the abolition of the imputed rental value with 57.7% in favour. However, the new rules will only come into force after a transitional period – expected no earlier than the 2028 tax year. Until then, the existing provisions remain unchanged.

What Is the Imputed Rental Value?

Definition

The imputed rental value is a fictional income that property owners must declare when they live in their own property. It corresponds to an estimated rent that could be achieved on the market for a comparable apartment or house.

Purpose of the Rule

The taxation is intended to prevent property owners from being tax-advantaged compared to tenants. While tenants pay rent from already-taxed income, property owners benefit from living rent-free. In return, property owners are entitled to deduct certain costs such as mortgage interest and maintenance expenses from their taxable income.

Calculation of the Imputed Rental Value

Determined by the Cantons

The imputed rental value is set by the cantonal tax authorities based on criteria such as:

• Size and location of the property
• Features and year of construction
• Comparable market rents

Percentage of Market Value

In most cantons, the imputed rental value amounts to 60% to 70% of the market rent. According to Federal Supreme Court case law, the imputed rental value for direct federal tax purposes must not be less than 60% of the market rental value.

Example

A condominium would achieve a market rent of CHF 24,000 per year. The imputed rental value is set at 65%, i.e. CHF 15,600. This amount is added to taxable income.

Deductions Related to the Imputed Rental Value

Mortgage Interest

Property owners can deduct their mortgage interest from taxable income. This often partially or fully offsets the burden of the imputed rental value.

Important: At the federal level, the deduction of private debt interest is capped at the amount of taxable investment income plus CHF 50,000. This can become relevant for those with high mortgage debt and low investment income.

Maintenance Costs

Property owners can claim maintenance and renovation costs – either as a flat-rate deduction or based on actual costs (with receipts). For the flat-rate option, most cantons allow the following rates:

• Buildings up to 10 years old: Flat rate of 10% of the imputed rental value
• Buildings over 10 years old: Flat rate of 20% of the imputed rental value

A key distinction must be observed:

• Value-maintaining investments (e.g. painting, repairs, replacing existing fixtures) are tax-deductible.
• Value-enhancing investments (e.g. adding a conservatory, expanding living space) are generally not deductible.

Energy-Saving Renovations

Costs for energy-efficiency measures are also deductible and can significantly reduce the tax burden. Since 2020, these costs as well as demolition costs for replacement buildings can be spread across up to three tax periods if they exceed taxable income in the year of investment.

Imputed Rental Value for Second Homes

An imputed rental value is also levied on second homes (e.g. holiday apartments) if they are used by the owner and not rented out. The taxation takes place in the canton where the property is located. For second homes in other cantons, the imputed rental value has a rate-determining effect in the canton of residence – it increases the tax rate on the remaining income.

Differences Between Cantons

Varying Cantonal Rates

• Zurich: approx. 60–70% of market rent
• Bern: approx. 70% of market rent
• Geneva: partly based on individual calculation using comparable values

Adjustments

In some cantons, the imputed rental value is regularly adjusted to market developments, while in others the values remain significantly below actual market rents. Property owners can request a review of the imputed rental value from the tax authorities if they believe it has been set too high.

Abolition of the Imputed Rental Value: Referendum and Consequences

The Decision

On 28 September 2025, the Swiss electorate approved the abolition of the imputed rental value with 57.7% in favour and a clear majority of cantons. This ends the over 90-year practice of taxing a fictional income for owner-occupied property.

The proposal was linked to a constitutional amendment giving cantons the authority to introduce a property tax on second homes. Both proposals were accepted together.

What Changes?

• No more imputed rental value for owner-occupied primary and second homes.
• Elimination of maintenance deductions for owner-occupied property – at both federal and cantonal level. Deductions remain available for rented properties.
• Restriction of mortgage interest deductions: Mortgage interest on owner-occupied property can generally no longer be deducted. Two exceptions exist: for first-time buyers (limited to ten years) and for rented or leased properties (using the proportional-restrictive method).
• Elimination of deductions for energy-saving and environmental measures at the federal level. Cantons may maintain their own deduction options until 2050 at the latest.
• Heritage conservation work remains deductible at the federal level.
• Cantonal property tax on second homes: Cantons may introduce a new property tax on second homes to compensate for lost tax revenue.

Entry into Force

The abolition has been decided but is not yet in force. The existing rules continue to apply unchanged until the end of the transitional period. According to the Federal Tax Administration, 1 January 2028 is the earliest realistic date for entry into force.

Who Benefits?

• Retirees and owners with paid-off mortgages: They benefit the most, as the imputed rental value is eliminated while they had little mortgage interest to deduct anyway.
• First-time buyers: They benefit from the tax exemption and can additionally claim a limited mortgage interest deduction for ten years.
• Owners with high mortgages and properties in need of renovation: They lose the mortgage interest and maintenance deductions and may be worse off than before.

Recommendation for the Transitional Period

Pending value-maintaining renovations and energy-saving improvements should where possible be carried out before the new rules take effect, while tax deductions can still be claimed. Contributions to the renovation fund for condominium ownership can also still be deducted until the system change.

Practical Examples

Example 1: Home with Mortgage

A couple in Zurich lives in a home with an imputed rental value of CHF 18,000. They pay CHF 16,000 in mortgage interest and claim CHF 3,600 as flat-rate maintenance costs (20%). The imputed rental value effectively increases taxable income by only CHF 18,000 – CHF 16,000 – CHF 3,600 = a reduction of CHF 1,600 compared to the imputed rental value. In this case, the burden of the imputed rental value is more than compensated.

Example 2: Mortgage Largely Paid Off

A couple in Bern has almost fully paid off their mortgage. The imputed rental value of CHF 14,000 results in a full additional tax burden, as almost no interest can be deducted. This couple will benefit significantly after the abolition of the imputed rental value.

Example 3: First-Time Buyer After Abolition

A young family buys their first property in 2029. They no longer have to declare an imputed rental value and can claim a limited mortgage interest deduction for ten years. However, maintenance costs can no longer be deducted.

Common Mistakes and Tips

Common Mistakes

• Assuming that owner-occupied property is tax-free (applies until abolition takes effect).
• Underestimating the tax consequences of a paid-off mortgage.
• Failing to declare maintenance costs or use the flat-rate deduction.
• Confusing value-maintaining and value-enhancing investments.
• Ignoring the transitional period – the existing rules still apply until at least 2028.

Tips

• Factor the imputed rental value into tax planning as long as it still applies.
• Consistently deduct mortgage interest and maintenance costs.
• Carry out energy-saving renovations during the transitional period if possible, to take advantage of tax deductions.
• Calculate the long-term tax consequences when planning mortgage reductions.
• Monitor cantonal regulations and the exact date of entry into force.

Conclusion

The imputed rental value is a central but often controversial element of Swiss tax law. It ensures that property owners are taxed similarly to tenants, but creates tax disadvantages when the mortgage is largely paid off.

With the referendum of 28 September 2025, Switzerland approved a fundamental system change: the imputed rental value will be abolished, but important deduction options will also be eliminated. Until the new rules come into force – expected no earlier than 2028 – the existing provisions apply. Property owners should use the transitional period to carry out planned renovations and review their mortgage structure.