Abolition of Imputed Rental Value: what changes for property owners from 2029

What was actually decided on 28 September 2025

The proposal had two parts, and both were approved. First: the abolition of imputed rental value as taxable income for owner-occupied residential property. Second, inseparably linked: the constitutional basis allowing cantons to levy a property tax on secondary residences (HEV, FDF). One could not exist without the other. The linkage was widely interpreted as meaning that the tourism cantons would not have agreed to pure abolition, as it would have eroded their tax base from second-home owners. The offsetting tax was seen as the political price.

For you as an owner this means: there is not one reform but two movements. The federal logic, imputed rental value gone and deductions gone, is the same everywhere. The cantonal logic, a new object tax and possible continuation of energy deductions, will differ from canton to canton. Anyone who holds a second home in the Valais, Graubunden or Ticino must follow cantonal implementation just as closely as the federal rule.

The core: no more notional income, but also no more deductions

Today you pay tax on an imputed rental value on your owner-occupied home, a notional income for living in your own four walls. In return you may deduct property maintenance, administration costs and insurance premiums, plus mortgage interest. The imputed rental value has been a fixed part of Swiss owner taxation for decades. Its abolition completely overturns this logic.

From 2029 the imputed rental value as notional income no longer applies to owner-occupied residential property. In return, the deductions for property maintenance, administration costs and insurance premiums on self-used properties also disappear (FDF, BDO, VZ, T+R). The key calculation: you lose an income you never actually received, and you lose deductions that were genuinely worth money to many owners.

Whether you end up better or worse off depends on one question: were your previous deductions higher or lower than the imputed rental value that disappears? For a recently renovated older building with high ongoing maintenance and a large mortgage, the deductions were often higher. For a debt-free, well-maintained house the imputed rental value was the greater burden. That is the dividing line between winners and losers.

The mortgage interest deduction becomes a calculation exercise

The technically most demanding aspect of the reform is the new mortgage interest deduction. Today private owners deduct their mortgage interest up to the level of investment income plus CHF 50,000 (LUKB). From 2029 a proportional logic applies: the deductible share corresponds to the ratio of rented or leased properties to total assets, meaning movable plus immovable assets, not just real estate assets (FDF, BDO, Raiffeisen).

Owners who hold only movable assets and self-used properties will no longer be able to deduct any mortgage interest. Those who hold rented or leased properties retain the proportional deduction based on that ratio. For taxpayers without rental or lease income all private interest costs will be non-deductible, including consumer, personal and lombard loans (LUKB, FDF).

This proportional logic is why the reform can be uncomfortable for the classic, highly indebted owner-occupier without an investment property. They lose the mortgage interest deduction almost entirely as a rule of thumb, while their maintenance deductions also disappear. Those with a rental building in their portfolio can continue to optimise on that part.

The transition rule for first-time buyers: a time-limited window

The legislator has built in a time-limited entry aid. Anyone who acquires owner-occupied residential property in Switzerland for the first time as their primary residence may claim a limited, progressively declining mortgage interest deduction over ten years. The maximum amount in the first year is CHF 10,000 for married couples and CHF 5,000 for single and other taxpayers. It decreases annually by 10 percent of the opening amount and reaches zero after ten years (FDF factsheet of 15.08.2025, Migros Bank, ZKB). The deduction applies at both federal and cantonal level (Raiffeisen).

This is meaningful relief precisely in the phase when young families face the highest mortgage burden and the lowest reserves. But it is a bridge, not a permanent arrangement. The deduction shrinks by the same step every year and is gone after ten years. Buyers should factor in this degression from the outset and not plan on permanent relief.

Energy-efficient renovations: the federal government cuts, cantons may temporarily retain

This change hits those who were already planning to renovate. Investments in energy-saving, environmental and demolition measures are no longer deductible at the level of direct federal tax, for either self-used or investment properties (BDO, VZ). Monument preservation remains deductible at federal level; it is the exception.

Cantons may continue to allow deductions for energy-saving and environmental measures, but only until 2050 at the latest (FDF). The word "may" is key here, as is the time limit. From 2029 the tax attractiveness of a heat pump depends on the canton of residence, no longer on the federal rule, and cantonal relief too is time-limited until 2050 at the latest. Anyone planning a major energy renovation from 2029 must calculate at two levels separately, federal and cantonal, and should know the cantonal rule and its time limit before signing any quote.

Second homes: hit twice

For second-home owners the reform is the most uncomfortable. They lose all existing deductions, and as compensation for the cantons a possible, canton-optional property tax arrives: an object tax on predominantly self-used secondary residences, whose constitutional basis was approved on 28 September 2025 (Migros, VZ, FDF). Whether and at what level each canton introduces it is its own decision, and the introduction is still open (FDF, Raiffeisen).

In the worst case this means: no more deductions, plus a new annually recurring object tax. The tourism cantons in particular have an interest in compensating for the lost tax base. Anyone who holds a holiday property should do two things: monitor cantonal legislation at the location of the second home, and soberly calculate whether the property is still financially viable under the new regime. Those tempted by a sale should curb the reflex: a sale triggers property gains tax, and a quick sale before 2029 is rarely the cheapest option depending on holding period. Anyone retaining the property but wanting to shed the administration can hand management to a property manager.

Investment properties and legal entities: precision now matters

Rented and leased properties retain their logic. Maintenance remains deductible, and a mortgage interest deduction remains, but only proportionally based on the rental share. The current general deduction, investment income plus CHF 50,000, disappears (LUKB). The higher the self-used share of total assets, the smaller the remaining deduction. This makes clean, separate accounting for self-used and rented assets from 2029 a financial question, not a formality.

Legal entities are unaffected by the reform. An AG or GmbH holding properties can continue to deduct interest and maintenance (LUKB). This shifts the strategic question of whether a larger portfolio should be held privately or through a company. That question is complex and belongs in the hands of a tax adviser or trustee. Those who rent should not slip into complacency but set up the separation of their circumstances and their documentation now. That is what will determine in 2029 how much proportional deduction remains.

More on this in the related guide: Tax window until 2028: which renovation still pays off now

The pull-forward effect: why 2027 and 2028 are the most important years

The most consequential observation: value-preserving maintenance is only deductible up to and including tax year 2028 (Raiffeisen). From 2029 it is tax-dead for self-used properties. This creates a clear incentive to bring forward deferred maintenance while it is still deductible.

Raiffeisen therefore expects a renovation pull-forward effect before 2029. My assessment as a property manager, not a tax adviser: this will noticeably reduce tradesperson capacity in 2027 and 2028 and push up prices. Anyone who needs to renew the roof, windows, heating or bathroom in the next few years is better off tax-wise if the value-preserving work is invoiced under the old system. A tax saving swallowed by an overpriced quote, however, is no saving at all. Anyone who lets 2028 pass loses the maintenance deduction for self-used properties permanently.

The key distinction is between value-preserving maintenance, deductible while the old system runs, and value-enhancing investments, which are treated differently and are often only relevant at a later sale via the property gains tax. Which item goes into which bucket is decided by the tax authority in each individual case. For exactly that reason, keeping separate documentation of every invoice from today onwards determines what your tax adviser can still claim in 2029.

Before / After: owner-occupied property compared

Who benefits, who tends to be burdened

What owners should do before end of 2028

The clear line in four steps.

• Bring forward deferred value-preserving maintenance while it is still deductible up to and including 2028, and plan early before tradespeople are fully booked.
• Document every invoice separately and verifiably: value-preserving versus value-enhancing, self-used versus rented, so the tax authority cannot put items in the wrong bucket later.
• For second homes, monitor cantonal legislation and honestly assess whether the property is still viable under the new regime before a sale becomes a reflex.
• Before any major decision, from bringing forward a renovation to the question of private versus legal entity, have your own tax adviser or trustee run the numbers.

Where BoVita comes in

BoVita manages residential and investment properties in Switzerland, with additional specialisation in furnished rooms, flatshares and co-living. The tax calculation for your individual case belongs with your trustee or tax adviser. What we provide is the foundation that makes that advice work:

• We coordinate value-preserving maintenance before end of 2028 and schedule it before tradespeople are fully booked.
• We document every invoice separately and verifiably: value-preserving versus value-enhancing, self-used versus rented.
• For investment properties we provide the correct accounting of maintenance and interest, cleanly separated between self-used and rented.
• If you want to hand over a second home or a property that is no longer viable, we provide the neutral market-value basis.