Abolition of the Imputed Rental Value in Switzerland: What Homeowners, Landlords and Investors Need to Know in 2026

Last updated: 27 May 2026. This article explains the law and guidance as at this date. Cantons may publish additional implementing rules, contact a local tax adviser for canton-specific confirmation.

Executive Summary, What Changed and Who It Affects

The imputed rental value in Switzerland, known in German as the Eigenmietwert, is being abolished following the national referendum of 28 September 2025, in which the Swiss electorate approved the reform. For decades, owner-occupiers have been required to declare a notional rental income on their primary residence, adding it to taxable income even though no cash was ever received. In return, the system allowed generous deductions for mortgage interest and property maintenance costs. The abolition removes this fictitious income line but simultaneously curtails several of those long-standing deductions, creating a fundamentally different tax equation for every property owner in the country.

The federal implementing decree and detailed guidance are being published during 2026, with the earliest likely effective tax years being 2028 or 2029, depending on cantonal enactment timelines. Industry observers expect most cantons to finalise their transitional rules by late 2027, making 2026 the critical planning window for homeowners, landlords, buyers and investors alike.

Key takeaways for homeowners:

• No more notional income. Owner-occupiers will stop declaring the Eigenmietwert as taxable income on their primary residence.
• Reduced deductions. Mortgage interest deductions and maintenance-cost deductions for owner-occupied property will be significantly limited or eliminated at the federal level.
• Net winners and losers. Households with low or no mortgage debt, particularly pensioners, stand to benefit most; heavily leveraged owners may see a higher effective tax burden.

Key takeaways for landlords and rental-property investors:

• Rental income remains taxable. Actual rental income from let properties continues to be declared and taxed normally, the abolition targets only notional owner-occupied income.
• Deduction framework shifts. The interaction between maintenance deductions, depreciation allowances and mortgage interest is changing; structuring reviews are advisable.
• Holding-company considerations. Tax-motivated transfers of property into or out of corporate structures should be evaluated carefully before implementation, given anti-avoidance scrutiny.

Key takeaways for prospective buyers and the mortgage market:

• Affordability recalculations. The disappearance of the imputed rental value alters the tax-adjusted cost of homeownership, which lenders factor into affordability assessments.
• Reduced tax incentive to borrow. Without full mortgage interest deductibility, the longstanding incentive to maintain high mortgage balances weakens considerably.
• Lender policy changes ahead. Early indications suggest that major Swiss banks are revising their debt-to-income models and amortisation guidance in anticipation of the reform.

What Is the Eigenmietwert and How Was It Calculated? Understanding the Imputed Rental Value in Switzerland

Definition and Legal Basis

The Eigenmietwert, or imputed rental value, is a form of notional income that Swiss tax law has attributed to owner-occupiers since the early twentieth century. The concept rests on the principle that a homeowner who lives in their own property derives an economic benefit equivalent to the rent they would otherwise have to pay. Under the Federal Act on Direct Federal Tax (DBG) and the corresponding cantonal tax harmonisation law (StHG), this theoretical benefit has been added to the taxpayer’s ordinary income and subjected to federal and cantonal income tax.

Typical Calculation Method, A Worked Numerical Example

While calculation methods varied by canton, the underlying approach followed a broadly consistent pattern. Tax authorities typically set the imputed rental value at a percentage of the property’s market rental value, itself derived from the official fiscal or taxable value of the property. The result was often lower than an open-market rent, commonly approximated at 60–70 % of what a tenant would actually pay, but it nonetheless formed a meaningful addition to the owner’s taxable income.

The following simplified example illustrates the pre-abolition mechanism:

At a combined marginal federal and cantonal income-tax rate of, say, 30 %, this CHF 23,400 of notional income generated an annual tax cost of roughly CHF 7,020, money owed on income the homeowner never received. It was this perceived unfairness, combined with the system’s complexity and its distortive effects on mortgage behaviour, that fuelled the decades-long push for the abolition of imputed rental value now taking effect as part of the broader property tax reform in Switzerland.

Tax Implications of the Abolition of Imputed Rental Value for Homeowners

The removal of the Eigenmietwert from taxable income is the headline change, but it does not operate in isolation. The reform package simultaneously adjusts the deduction rules that historically offset the notional income, producing a net effect that varies significantly depending on a household’s mortgage level, maintenance spending and canton of residence.

Mortgage Interest Deduction Changes and Interactions

Under the pre-reform system, homeowners could deduct mortgage interest paid from their taxable income, a deduction that, for many, substantially neutralised the Eigenmietwert. This created a well-documented incentive to maintain high mortgage balances rather than amortise debt, a pattern that distinguished Switzerland from most comparable European markets.

The reform curtails this mortgage interest deduction in Switzerland in a decisive way. At the federal level, mortgage interest on owner-occupied residential property will no longer be deductible, or will be deductible only up to the amount of taxable investment income (such as actual rental income from other properties), depending on the final implementing text. The practical effect is that for an owner-occupier with no rental properties, the mortgage interest deduction effectively disappears.

This is a major shift. A household paying CHF 15,000 per year in mortgage interest on its primary residence could previously deduct the full amount against income, reducing taxable income by that sum. After the reform, that deduction vanishes for owner-occupiers, while the CHF 23,400 of notional income (per the earlier example) also disappears. Whether the household is better or worse off depends on the relative size of these two figures, and on any maintenance deductions it was previously claiming.

Deductible Maintenance and Repair Adjustments

The current system allows homeowners to deduct actual maintenance, renovation and repair costs (or opt for a flat-rate deduction, typically 10–20 % of the imputed rental value depending on the property’s age). Under the reform, maintenance-cost deductions for owner-occupied property are expected to be eliminated or substantially reduced at the federal level, with the notable exception of energy-efficiency and environmental-protection investments, which may retain partial deductibility during a transitional period. This swiss real estate tax change means that owners who regularly undertook major renovations, and timed them to maximise tax benefits, will need to rethink their approach entirely.

Worked Example, Household A: Before vs After

The following comparison illustrates the net impact for a homeowner in a representative mid-range canton:

In this scenario, the homeowner gains a modest annual tax saving of approximately CHF 1,818. However, a household with a larger mortgage, say CHF 30,000 in annual interest, would previously have enjoyed a net deduction (mortgage interest exceeding imputed rental value), and the reform would leave that household worse off. Industry observers expect that the impact for homeowners will therefore split along clear lines: those with low or no mortgages benefit; those with high leverage lose their tax subsidy.

Landlords and Investors: Income Tax, Property-Holding Structures and Transactional Planning

The abolition of the imputed rental value applies specifically to owner-occupied residential property. For landlords and property investors who derive actual rental income from their holdings, the tax treatment of that income is not changing in the same way, but the surrounding deduction framework is shifting, and the knock-on effects are significant.

Investors: Reporting Rental Income and Capital-Gains Considerations

Actual rental income remains fully taxable as ordinary income at both federal and cantonal levels. This means the reform does not alter the fundamental tax equation for a buy-to-let investor: rents received are declared, and allowable expenses (including mortgage interest, management fees, insurance and repairs) continue to be deductible against that income. However, the cap or elimination of private mortgage interest deductibility may affect investors who hold both owner-occupied and rental property within the same personal tax return, since the deduction rules for each category are being decoupled.

Capital gains on Swiss real estate remain subject to cantonal real-estate gains tax (Grundstückgewinnsteuer), which is calculated separately from income tax and is not directly affected by the Eigenmietwert abolition. Nonetheless, the changed incentive structure may influence holding periods and sale timing, particularly where an investor is weighing a sale against continued rental operation under the new deduction regime.

Structuring and Common Planning Moves

The reform is prompting many investors to reassess whether property should be held personally or through a corporate vehicle. Under the pre-reform regime, the interplay of imputed rental value, personal mortgage interest deductions and flat-rate maintenance allowances often favoured personal ownership for small portfolios. With those personal deductions curtailed for owner-occupied property, the relative attractiveness of holding companies, which deduct all business expenses against rental income and are taxed on net profit, may increase for certain multi-property portfolios.

However, several cautions apply. Transferring property into a company triggers real-estate transfer taxes, notarial fees and potentially a deemed disposal for capital-gains tax purposes. Swiss tax authorities are well aware of tax-motivated restructuring, and the general anti-avoidance doctrine (Steuerumgehung) remains a real enforcement tool. A transfer that lacks genuine economic substance, conducted solely to exploit a temporary deduction mismatch, risks being disregarded for tax purposes. Early indications suggest that cantonal tax administrations will scrutinise restructuring transactions completed in the years immediately surrounding the reform’s effective date with particular care.

Investors holding secondary residences, such as holiday apartments in alpine cantons, face an additional layer of complexity. The secondary residence tax treatment differs from that of primary residences, and certain cantons may retain or adapt imputed rental value concepts for second homes even after the federal-level abolition. This area remains in flux and requires canton-level confirmation before any planning decisions are finalised.

Financing and Mortgage Market Effects, Lender Responses and Affordability

The abolition of the imputed rental value in Switzerland has significant implications beyond tax returns. It reshapes the economic logic of Swiss mortgage borrowing, which for decades was structured around the tax-deductibility of interest payments.

Under the old system, many Swiss homeowners deliberately maintained high loan-to-value ratios because the mortgage interest deduction in Switzerland effectively subsidised the cost of borrowing. With that subsidy disappearing for owner-occupied property, the after-tax cost of carrying a mortgage rises. Industry observers expect this to drive a gradual shift toward faster amortisation and lower average LTV ratios across the Swiss mortgage market.

Major lenders are already adapting. Published commentary from leading Swiss banks indicates that affordability calculations, which traditionally accounted for the tax relief on mortgage interest, are being recalibrated. The imputed interest rate used in stress-testing (typically 4.5–5 % under FINMA guidance) remains unchanged, but the assumed tax benefit layered into disposable-income calculations is being reduced or removed. This may tighten affordability thresholds for marginal buyers, particularly in high-cost markets such as Zurich, Geneva and the Lake Geneva arc.

The pricing of mortgages themselves is unlikely to change directly as a result of the reform, interest rates are driven by capital-market conditions, central-bank policy and bank funding costs. However, the competitive landscape may shift as borrowers reassess product choices: shorter fixed-rate terms, more aggressive amortisation schedules and hybrid structures could gain favour.

What Buyers Should Ask Their Lender

• Affordability model update. Has the bank updated its affordability calculation to reflect the removal of the mortgage interest tax deduction? What is the new disposable-income threshold?
• Amortisation guidance. Does the lender recommend accelerated amortisation in light of the reform, and are there penalties for early principal repayment?
• Product suitability. Are shorter fixed-rate periods or SARON-linked products more attractive under the new tax framework?
• Refinancing impact. For existing borrowers approaching a renewal date, how does the reform affect the optimal loan amount and structure?
• Second-home financing. Do underwriting rules differ for secondary or holiday residences, given the potentially different cantonal treatment?

Timing, Transitional Rules and Canton Differences in This Property Tax Reform in Switzerland

The reform follows a multi-stage implementation path. The federal electorate approved the constitutional basis on 28 September 2025, but the change does not take immediate effect. The Federal Council must enact implementing legislation and ordinances, and cantons, which administer income tax independently, must adopt their own transitional provisions. The result is a staggered and potentially uneven rollout across the country’s 26 cantons.

Until the implementing measures take effect, every homeowner must continue to declare the Eigenmietwert on their tax return and may continue to claim existing deductions. The transitional period is critical: actions taken now, such as bringing forward major renovations to capture current deduction rules, or accelerating mortgage amortisation, may generate material tax savings or avoid future disadvantages.

Key Canton Action Items, Zurich, Vaud, Geneva and Bern

Canton differences in property tax implementation are expected to be significant. While precise cantonal legislation is still being drafted in most cases, the following outlines the current status for four major cantons:

• Zurich. The cantonal tax authority has published preliminary guidance acknowledging the federal reform. Zurich is expected to align closely with the federal timeline. Owners should monitor the cantonal gazette and the Zurich tax office website for draft implementing rules.
• Vaud. Vaud’s tax administration has signalled that it will adopt the reform but has not yet published a specific effective date or transitional provisions. Property owners in Vaud should seek canton-specific advice before making structural or financial decisions.
• Geneva. Given Geneva’s historically distinct approach to property taxation, including its own schedular property-tax rates, the interaction with the federal abolition is expected to be complex. No cantonal guidance had been published as of May 2026.
• Bern. The canton of Bern has indicated general support for the reform’s objectives. Detailed implementing rules remain pending. Owners of second homes in the Bernese Oberland should pay particular attention to any continued secondary residence tax provisions.

Practical Checklist: Immediate Steps for Homeowners, Landlords and Investors

With the reform approaching but not yet in force, 2026 is the year to prepare. The following checklist covers the most important action items for each audience:

For homeowners (primary residence):

• Run a before-and-after tax projection using the worked-example methodology above, or engage a tax adviser to model your specific canton and income bracket.
• Review your mortgage amortisation schedule. If the net tax benefit of carrying debt is disappearing, consider accelerating principal repayments before the reform takes effect.
• Bring forward any planned maintenance or renovation work that qualifies for current deductions, particularly energy-efficiency upgrades, which may retain partial deductibility under transitional rules.
• Check whether your canton has published transitional guidance and note any filing deadlines or elections that must be made during the changeover period.

For landlords and rental-property owners:

• Confirm that your accounting separates owner-occupied and rental properties clearly, as the deduction rules for each category are diverging.
• Review existing lease agreements and rental yields against the new tax framework to ensure ongoing profitability assumptions remain valid.
• Assess whether your current ownership structure (personal vs corporate) remains optimal, but do not restructure purely for tax reasons without professional advice on anti-avoidance risks.

For investors and prospective buyers:

• Factor the reform into any acquisition due diligence: purchase-price models that assumed imputed rental value deductions or mortgage interest offsets must be updated.
• Ask your bank or mortgage broker specifically how the reform affects your borrowing capacity and affordability assessment.
• If you own or are acquiring a secondary residence, investigate the canton-specific treatment, the abolition of imputed rental value may not apply uniformly to second homes.
• Engage a Swiss real estate tax adviser to review your portfolio’s exposure to the reform and identify any transitional planning opportunities before the effective tax year arrives.

Sources

1. Swiss Confederation, Federal Guidance on Cantonal Property Taxes and Imputed Rental Value
2. UBS, How Does the Imputed Rental Value Work?
3. Piguet Galland, Abolition of the Imputed Rental Value: A Major Tax Turning Point
4. KPMG Switzerland, Abolition of Imputed Rental Value
5. Swiss Life, Abolition of Imputed Rental Value: What to Expect
6. Swiss Federal Tax Administration (FTA)
7. MoneyPark, Imputed Rental Value: The Key Details
8. Zurich Insurance, Vote on the Imputed Rental Value: Pros and Cons