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Imputed rental value in simple terms.
What is imputed rental value?
Imputed rental value is a Swiss tax system that is designed to even out the tax disadvantages of being a tenant compared to a property owner, as maintenance costs and interest payments on loans are tax-deductible for property owners. In return, they have to pay tax on a notional rental income. This type of tax hardly exists anywhere else in Europe and has repeatedly given rise to political debate in Switzerland. In 1999, 2004 and 2012, proposals to abolish the tax on imputed rental value were rejected at the ballot box. However, the centre-right parties, together with the Swiss Homeowners’ Association (HEV) and the Swiss Trade Association (SGV), finally got their way on 28 September 2025. Imputed rental value tax will now be abolished and replaced by a new cantonal property tax on second homes. However, this is not expected to come into effect until at least early 2028.
How is imputed rental value calculated?
In Switzerland, imputed rental value is determined by the cantonal tax authorities and is based on the market rental value of similar properties. It is generally 60–70% of the typical rent for the area. Factors such as location, size, furnishings and year of construction impact the amount. Each canton has its own calculation model – some have blanket rates while others follow detailed valuation procedures. The tax office may provide an individual estimate, especially for modifications like conversions.
Example imputed rental value calculation
What will the abolition of imputed rental value tax mean for property owners?
When the new system takes effect, the imputed rental value as well as the deductions for mortgage interest and maintenance costs on owner-occupied property will be abolished at both federal and cantonal level. Cantons can continue to allow deductions for energy-efficiency and environmentally friendly measures and levy a new property tax on owners of second homes.
Exceptions:
- First-time buyers will be able to deduct mortgage interest of up to CHF 10,000 (married couples) and CHF 5,000 (single persons) for tax purposes. These amounts will decrease linearly over ten years after the purchase of owner-occupied residential property.
- Owners of an investment property can continue to deduct part of the mortgage interest for the investment property. The amount that can be deducted is based on what proportion of the total assets is represented by the non-owner-occupied property.
Who stands to benefit and who might end up paying more?
At present, the imputed rental value is set very low in many cantons, which means it can usually be offset by the deductions for mortgage interest and annual maintenance costs. The change will be felt more by homeowners who don’t invest in their property and are therefore unable to deduct much for tax purposes. Overall, it can be said that households with small mortgages, low mortgage interest rates and few deductible investments are likely to pay less tax in future, as they cannot fully offset the imputed rental value at present. Households with large mortgages, high mortgage interest rates and many upcoming renovations will be hit harder. They can currently “overcompensate” for the imputed rental value, which will no longer be possible after it is abolished.
Households with small mortgage volumes and low mortgage interest rates
Households with low investment deductions
New buyers eligible for a first-time buyer deduction
Households with large mortgage volumes and high mortgage interest rates
Owners of older properties with significant renovation needs
Property owners with multiple residential units that are rented out
What are the negative consequences of abolishing the tax on imputed rental value?
Depending on interest rate levels, the abolition of the imputed rental value system will lead to significant tax losses for the Confederation and the cantons. At the same time, the abolition of maintenance deductions will make renovations less attractive. The change is also likely to have an impact on the mortgage market. Based on the available data, MoneyPark expects around 50 to 150 billion to flow back within five years of the imputed rental value tax being abolished. The upper end of this range would mean that the Swiss mortgage market – which has grown by around CHF 30 billion a year on average over the last ten years, from around CHF 900 billion to over CHF 1,200 billion – would no longer expand. This is because the abolition of imputed rental value tax is expected to result in roughly the same amount flowing back each year in the form of mortgage repayments.
What others wanted to know.
Our property experts give an insight into a selection of the most frequently asked questions. You can submit your own question too. We will be happy to help you.
Rebecca B. (33), Liestal
How is imputed rental value taxed?
In Switzerland, imputed rental value is taxed as notional income and must be declared in your annual tax return – both for federal and cantonal tax.
This is how the tax works:
- Income tax: The imputed rental value is added to your other income, increasing your taxable income.
- Declaration: The amount is specified by the cantonal tax administration. In the event of discrepancies or modifications (e.g. property conversion), you can request a correction.
- Deductions: In return, mortgage interest, maintenance costs (e.g. for renovations) and insurance premiums can be deducted from your income, reducing your tax burden.
Christoph L. (48), Olten
Should I pay off my mortgage before the tax on imputed rental value is abolished?
When paying off your mortgage, several aspects should always be considered. In addition to the impact on your tax bill, it is equally important to think carefully about whether you can afford to part with the savings that you plan to use to repay the mortgage. You need enough reserves to cover upcoming renovations, maintain the same standard of living and deal with any unforeseen events. Increasing the remaining mortgage or even taking out a new one can be far from straightforward after reaching retirement age. Finally, it is worth considering how the funds set aside to repay the mortgage are currently invested. Interest rates are still at an all-time low, which means there is a real opportunity for your savings to generate returns that exceed the actual interest costs. If this is not the case, it may well make sense to use your savings to pay off part of the mortgage and thereby reduce interest costs. We provide comprehensive financial and pension planning and will be happy to help you make the right decision.
Christoph L. (48), Olten
Is it worth carrying out a major renovation before the tax on imputed rental income is abolished?
If you’re planning a major renovation to preserve the value of your property, it makes sense from a tax perspective to do so before the tax on imputed rental value is abolished. The costs associated with such a project are currently tax-deductible, which will reduce your tax burden. Once the new system comes into effect, you will no longer be able to benefit, although cantons can still allow tax deductions for energy-efficiency measures.
Rebecca B. (33), Liestal
How is imputed rental value taxed?
In Switzerland, imputed rental value is taxed as notional income and must be declared in your annual tax return – both for federal and cantonal tax.
This is how the tax works:
- Income tax: The imputed rental value is added to your other income, increasing your taxable income.
- Declaration: The amount is specified by the cantonal tax administration. In the event of discrepancies or modifications (e.g. property conversion), you can request a correction.
- Deductions: In return, mortgage interest, maintenance costs (e.g. for renovations) and insurance premiums can be deducted from your income, reducing your tax burden.
Christoph L. (48), Olten
Should I pay off my mortgage before the tax on imputed rental value is abolished?
When paying off your mortgage, several aspects should always be considered. In addition to the impact on your tax bill, it is equally important to think carefully about whether you can afford to part with the savings that you plan to use to repay the mortgage. You need enough reserves to cover upcoming renovations, maintain the same standard of living and deal with any unforeseen events. Increasing the remaining mortgage or even taking out a new one can be far from straightforward after reaching retirement age. Finally, it is worth considering how the funds set aside to repay the mortgage are currently invested. Interest rates are still at an all-time low, which means there is a real opportunity for your savings to generate returns that exceed the actual interest costs. If this is not the case, it may well make sense to use your savings to pay off part of the mortgage and thereby reduce interest costs. We provide comprehensive financial and pension planning and will be happy to help you make the right decision.
Christoph L. (48), Olten
Is it worth carrying out a major renovation before the tax on imputed rental income is abolished?
If you’re planning a major renovation to preserve the value of your property, it makes sense from a tax perspective to do so before the tax on imputed rental value is abolished. The costs associated with such a project are currently tax-deductible, which will reduce your tax burden. Once the new system comes into effect, you will no longer be able to benefit, although cantons can still allow tax deductions for energy-efficiency measures.
