What will change following the abolition of the rental value?

23.10.2026

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Change is coming: with the abolition of rental value taxation, owner-occupied residential property will undergo fundamental tax-related changes. We explain what will change in the future.

At a glance

  • Generally speaking, the deductions for maintenance costs and insurance premiums for owner-occupied residential property (first and second home) will cease to apply.
  • In future, private debt interest will only be deductible on a proportional basis, i.e. in relation to the ratio of properties located, leased or rented in Switzerland to the total assets.
  • Maintenance costs can still be deducted for leased or rented properties; debt interest remains deductible to a limited extent.
  • Tax benefits for energy-saving and environmental protection measures will no longer be applicable to direct federal tax. Cantons can stipulate that these costs remain deductible until 2050 at the latest.
  • A special real estate tax (property tax) can be levied on second properties that are predominantly owner-occupied.

What is the rental value and when will the system change?

Anyone who previously owned a property and lived in it themselves had to pay what is known as a rental value tax as income to the federal government, canton and municipality. Put simply, the rental value corresponds to the rent that owners could charge if they did not live in their house or apartment themselves. In return, debt interest, maintenance costs and insurance premiums for owner-occupied properties could previously be deducted from income. This system will continue to exist in basically the same form up to and including the 2028 tax period. On 1 April 2026, the Federal Council decided that the change in system would take effect on 1 January 2029.

“The abolition of rental value taxation has individual implications for homeowners. It is advisable to analyse your personal situation with a specialist. This change will take place in 2029, meaning there is still time to prepare.”

Dominic Nazareno, Certified Tax Expert, Advanced Federal Diploma of Higher Education/Partner, PrimeTax Ltd.

On 28 September 2025, Swiss voters accepted the bill entitled “Federal decree on cantonal property taxes on second homes”, giving the green light for the abolition of rental value taxation. This settled a decades-old dispute in tax law. Following the “yes” vote, there will be a change in the way home ownership is taxed. 

Keeping an eye on your real estate financing

If you would like an assessment of the impact of the change in system on your personal tax situation, the best course of action is to contact a tax expert. We would be happy to help if you have any questions about financing your property or other financial matters.

Arrange an appointment now

The change in system will have these effects

In future, homeowners will no longer have to pay tax on the rental value of owner-occupied properties. This applies to the main residence as well as to second homes and holiday homes – regardless of the number of homes. 

Deductions will vary in future based on use and cost type.

  • The deduction of costs for property maintenance at the federal, cantonal and municipal level will be abolished. This also applies to the insurance premiums for owner-occupied properties.
  • Deductions for energy-saving and environmental protection measures will no longer apply for direct federal tax. Cantons and municipalities may continue to grant such deductions until 2050 at the latest. 2050 has been specified as the year based on Switzerland’s long-term energy and climate policy targets (target of net zero by 2050 and decarbonization of the building stock).
    Considerable differences have already emerged in how the cantonal discretion is to be applied in the run-up to 2050: Aargau and Lucerne are intending to maintain deductions for energy-saving and environmental protection measures, with efforts to similar effect under way in St. Gallen, while Bern has not yet decided. Zurich wanted to take the opposite approach and intended to completely abolish deductions as soon as the new system comes into force (provisionally in 2029) – citing system continuity and the risk of revenue shortfalls – but opted instead for subsidies. Recently, however, opposition has emerged: in the Cantonal Parliament, a center-right alliance of the Swiss People’s Party, the Liberals, the Centre, the Green Liberal Party and the Evangelical People’s Party has formed, calling for it to be maintained, forcing the Cantonal Council to reconsider. In summary, consistent implementation throughout Switzerland is nowhere in sight and homeowners should keep an eye on the regulations in their canton of residence. 
  • Generally speaking, the costs of heritage conservation work remain deductible in the case of direct federal tax. At cantonal level, the deduction is based on the legislation of the respective canton. 
  • In future, demolition costs for the construction of a new replacement building will no longer be deductible from direct federal tax. However, the cantons may continue to allow such deductions. 

Simplified example: now and from 2029

One person lives in a house that they own. The rental value is CHF 24,000 per year. The deductible mortgage interest amounts to CHF 12,000, while the deductible maintenance costs are CHF 5,000. For the simplified example, a marginal tax rate of 25 percent is assumed.

ItemAmount
Item
Rental value
 Amount
CHF 24,000
Item
– Debt interest
 Amount
CHF 12,000
Item
– Maintenance costs
 Amount
CHF 5,000
Item
+ Taxable income
 Amount
CHF 7,000

With a marginal tax rate of 25 percent, this results in a simplified tax burden of CHF 1,750: additional taxable income of CHF 7,000 × marginal tax rate of 25 percent = CHF 1,750 in taxes

From 2029:

Rental value of CHF 24,000 ceases to apply. At the same time, debt interest of CHF 12,000 and maintenance costs of CHF 5,000 can no longer be deducted in the case of owner-occupied property.

In this simplified example, the tax burden is therefore reduced by CHF 1,750, as the previously taxable amount of CHF 7,000 no longer has to be taxed as additional income. By contrast, if the previous deductions for debt interest and maintenance costs are higher than the rental value, discontinuing these may lead to a higher tax burden.

The example does not take into account any special cantonal regulations, wealth taxes, other income or deductions and is merely intended to illustrate the change in system.

Generally speaking, private debt interest will no longer be deductible once the change in system takes effect . This includes, for example, debt interest on mortgages, private loans, credit card debt, consumer loans and lombard loans. An exception applies to people with properties that are leased or rented in Switzerland: they can still deduct part of their debt interest. The amount of this deduction depends on the proportion of the total assets that are accounted for by the properties that are rented or leased. In future, the reason for which a loan was originally taken out will no longer be the decisive factor.

Note that there will be no change to wealth tax: mortgage debt, personal loans or lombard loans will still be fully deductible from assets.

Examples: how the proportional debt interest deduction is calculated

Example: private individual with owner-occupied property (with mortgage), rental flat and personal loan

A person owns an owner-occupied house and a rental flat. They have no other assets.

Total taxable assets

Asset componentTax value
Asset component
Owner-occupied house
 Tax value
CHF 1,200,000
Asset component
Rental flat
 Tax value
CHF 400,000
Asset component
Taxable total assets
 Tax value
CHF 1,600,000

Debt interest

Debt typeDebt interest
Debt type
Mortgage of owner-occupied house
 Debt interest
CHF 20,000
Debt type
Cost of interest on mortgage on rental flat
 Debt interest
CHF 5,000
Debt type
Personal loan
 Debt interest
CHF 5,000
Debt type
Total debt interest
 Debt interest
CHF 30,000

Calculation

The rental flat accounts for 25 percent of the total taxable assets. 25 percent of the total debt interest can therefore be deducted.

30,000 × 25 percent = CHF 7,500

Tax-deductible debt interest

This means that CHF 7,500 is tax-deductible. The amount differs from both the total debt interest (CHF 30,000) and the effective mortgage interest on the rental flat (CHF 5,000).

The fact that the debt is attributable to the property is not the decisive factor. It makes no difference that part of the interest comes from a personal loan. The proportion of total assets accounted for by the rental property is the decisive factor.

The example shows that a proportional debt interest deduction remains possible if a person owns a leased or rented property in Switzerland.

Example: wealthy entrepreneurs

An entrepreneur has total assets of CHF 6 million.

Total assets

Asset typeAssets
Asset type
Rental property (tax value)
 Assets
CHF 1,500,000
Asset type
Securities
 Assets
CHF 2,500,000
Asset type
Shareholding
 Assets
CHF 2,000,000
Asset type
Total assets
 Assets
CHF 6,000,000

Debt interest

Debt typeDebt interest
Debt type
Mortgage on rental property
 Debt interest
CHF 4,000
Debt type
Securities-backed loan (lombard loan)
 Debt interest
CHF 5,500
Debt type
Total debt interest
 Debt interest
CHF 9,000

Calculation

At CHF 1.5 million, the rental property represents 25 percent of total assets. This means that only 25 percent of the total debt interest can be deducted.

Debt interest deduction

This means that CHF 2,375 can be deducted: CHF 9,500 × 25 percent = CHF 2,375

The example shows that the permitted debt interest deduction quickly fuses together, especially for people with diversified assets – participations, securities, real estate – even if the effective external financing remains unchanged.

Example: deduction for first-time buyers

The change in system will come into force on 1 January 2029. 2029 is therefore the first tax year subject to the new legal framework.

A fixed-term debt interest deduction will be introduced for people who buy owner-occupied residential property in Switzerland for the first time and live in it as their first property. With this first-time buyer deduction, first-time buyers can claim a limited deduction for ten years, falling linearly to zero. 

DeductionMarriedSingle
Deduction
Mortgage of owner-occupied house
 Married
CHF 10,000
 Single
CHF 5,000
Deduction
Cost of interest on mortgage on the rental flat
 Married
CHF 1,000
 Single
CHF 500
Deduction
Personal loan
 Married
10 years
 Single
10 years

The initial maximum amount is reduced in each subsequent year by 10 percent of the initial amount, i.e. by CHF 1,000 or CHF 500. 

Requirements

  • Residential property bought in Switzerland for the first time
  • Permanently and exclusively owner-occupied
  • This is a maximum amount: only the debt interest actually paid can be deducted. 

Example: purchase before the change in system in 2026

A single person bought their own home in 2026.

Purchase
2026
First tax year under new legal framework
2029
2029 is considered as
the fourth year (past 3 years)
Maximum deduction 2029
CHF 3,500
Duration remaining
7 years (2029 to 2035)

Debt interest deduction

The person can therefore still claim the deduction for seven years (2029 to 2035). The maximum deduction in 2029 is still CHF 3,500, and the following year CHF 3,000, etc. (but no more than the debt interest actually paid that year).

Example: purchase after change in system in 2030
A single person buys an owner-occupied flat for the first time in 2030 and can claim a limited deduction for ten years.

YearMaximum deduction
Year
2030, first year
 Maximum deduction
CHF 5,000
Year
2031, second year
 Maximum deduction
CHF 4,500
Year
From 2032–2040
 Maximum deduction
Tax deduction remaining, falling by CHF 500 annually for eight years

Debt interest deduction
The maximum deduction applies regardless of whether the actual mortgage interest is higher. This is therefore a maximum amount: at most, the debt interest actually paid can be deducted.
In other words: 2030 (first year): for example, effective debt interest of CHF 8,000 → a maximum of CHF 5,000 is still deductible.

Find out more about the new debt interest regulations at efd.admin.ch (PDF) (PDF) The link will open in a new window

Under the current legal framework, whether or not building lease interest paid on owner-occupied leasehold properties can be deducted depends on the cantonal method of calculating the rental value: certain cantons already deduct the building lease interest when setting the rental value (net method), while others set the gross rental value and allow the building lease interest to be deducted separately (gross method). With the abolition of the rental value under the new legal framework, this cantonal differentiation will no longer apply: building lease interest will no longer be deductible for owner-occupied properties in future, regardless of the previous system. It should be made clear that building lease interest – under both the current and the new legal framework – is not legally classified as debt interest, but as compensation for the transfer or use of an individually determined property (not a sum of money). In the case of leasehold properties that have been rented out to somebody else, building lease interest is classed as an acquisition cost and will therefore remain deductible in the future; it is not subject to the newly introduced proportionally restricted allocation that applies to debt interest deduction.

Tourism cantons and municipalities are facing high tax losses due to the abolition of the rental value. A special tax on owner-occupied second properties gives the cantons scope to compensate for any shortfall in revenue from the second properties (such as holiday apartments). This is not an automatically incurred tax throughout Switzerland: the relevant canton determines whether to introduce it, which properties are within scope and how much it is. 

Money obtained through rentals or leasing must continue to be taxed as income. Debt interest can still be deducted in this case. The deduction is limited to the proportion of the taxable value of these properties relative to the total taxable assets.

Which rule applies to which property

PropertyUseTaxation from 2029Deductions from 2029
Property
Main residence
 Use
Fully owner-occupied
 Taxation from 2029
No rental value
 Deductions from 2029
Maintenance costs are generally no longer deductible; limited first-time buyer deduction for interest possible
Property
Second home or holiday home
 Use
Mainly owner-occupied
 Taxation from 2029
No rental value; possible cantonal special tax
 Deductions from 2029
Maintenance costs are generally no longer deductible
Property
Investment property
 Use
Fully rented or leased
 Taxation from 2029
Effective lease or rental income remains taxable
 Deductions from 2029
Maintenance costs remain deductible; debt interest only proportionate to the total assets, not property-specific
Property
Mixed-use property
 Use
Partly owner-occupied and partly rented out
 Taxation from 2029
No rental value on the owner-occupied part; effective income on rented part taxable
 Deductions from 2029
Maintenance costs generally deductible only for the rented part; debt interest only proportionate to the total assets, not property-specific
Property
Property owned by a company
 Use
Rental or use by holders of participations
 Taxation from 2029
Taxation in accordance with the rules for legal entities
 Deductions from 2029
Business-related costs generally deductible; private use must be compensated in line with market rates

What applies in the case of a real estate company?

As maintenance costs will no longer be deductible in the future and the debt interest deduction will only be possible to a limited extent for private individuals, the question of whether it may be more advantageous in certain circumstances from a tax perspective for a property to be owned by a real estate company is growing in importance. The reform concerns only private assets and not business assets.

Anyone who holds an owner-occupied property via their own real estate company must pay rent at market rates – this is usually significantly higher than the rental value that has applied to date. Unlike natural persons, however, legal entities may account for all maintenance and financing expenses in full as business-related expenses. If rental income and these costs are roughly the same, there is hardly any taxable profit at company level. Any excess expenses can also be carried forward to subsequent financial years.

For purely owner-occupied properties, this structure is usually not worthwhile due to the market rental rates. The shareholder pays the market rent from taxed income, with no option to deduct the rent, while the company, by contrast, offsets the costs. The situation is different for properties with high maintenance costs, especially in combination with investment properties that have been rented out – in this case, the model may pay off. In the case of fully or partially rented properties, the initial situation is generally different: interest expense is fully deductible in the company – without the proportional restriction that applies to private individuals. However, this is offset by dividend taxation and any real estate gains tax in the event that it is subsequently transferred to private assets.

Note: it must be assessed on a case-by-case basis whether a real estate company may be suitable and advantageous from a tax perspective; the above statements are not a recommendation.

Overview of residential property taxation: what’s changing for owner-occupied homes

The examples show in a greatly simplified manner what applies to the taxation of residential property until the system changes, or what is and is not planned for after the system changes. The idea is to give an overall impression, not to provide fine detail.

What’s changing?Residential property taxation until the rental value is abolishedResidential property taxation after the rental value is abolished
What’s changing?
Taxation of rental value
 Residential property taxation until the rental value is abolished
Yes
 Residential property taxation after the rental value is abolished
No
What’s changing?
Deduction of property maintenance costs
 Residential property taxation until the rental value is abolished
Yes
 Residential property taxation after the rental value is abolished
No
What’s changing?
Deduction of general debt interest
 Residential property taxation until the rental value is abolished
Yes
 Residential property taxation after the rental value is abolished
Proportionately, only for rented or leased properties
What’s changing?
Deduction of debt interest on first acquisition
 Residential property taxation until the rental value is abolished
As part of the “deduction of general debt interest”
 Residential property taxation after the rental value is abolished
Yes, but only possible to a limited extent and decreasing annually
What’s changing?
Deduction of energy-saving and environmental protection measures
 Residential property taxation until the rental value is abolished
Yes
 Residential property taxation after the rental value is abolished
No
What’s changing?
Deduction of heritage conservation work
 Residential property taxation until the rental value is abolished
Yes
 Residential property taxation after the rental value is abolished
Yes
What’s changing?
Deduction of demolition costs for new-build replacement
 Residential property taxation until the rental value is abolished
Yes
 Residential property taxation after the rental value is abolished
No
What’s changing?
Transfer option deductions
Residential property taxation until the rental value is abolished
No
 Residential property taxation after the rental value is abolished
No
What’s changing?
Special property tax on second properties
 Residential property taxation until the rental value is abolished
Not levied by the federal government
 Residential property taxation after the rental value is abolished
Not levied by the federal government

Source: The link will open in a new window Property taxes on second properties at admin.ch

What’s changing?Residential property taxation until the rental value is abolishedResidential property taxation after the rental value is abolished
What’s changing?
Taxation of rental value
 Residential property taxation until the rental value is abolished
Yes
 Residential property taxation after the rental value is abolished
No
What’s changing?
Deduction of property maintenance costs
 Residential property taxation until the rental value is abolished
Yes
 Residential property taxation after the rental value is abolished
No
What’s changing?
Deduction of general debt interest
 Residential property taxation until the rental value is abolished
Yes
 Residential property taxation after the rental value is abolished
Proportionately, only for rented or leased properties
What’s changing?
Deduction of debt interest on first acquisition
 Residential property taxation until the rental value is abolished
Yes, as part of the “general debt interest deduction”
 Residential property taxation after the rental value is abolished
Yes, but only possible to a limited extent and decreasing annually
What’s changing?
Deduction of energy-saving and environmental protection measures
 Residential property taxation until the rental value is abolished
Yes 
 Residential property taxation after the rental value is abolished
Possible in principle, but under the authority of the relevant canton (by 2050 at the latest)
What’s changing?
Deduction of heritage conservation work
 Residential property taxation until the rental value is abolished
Yes 
 Residential property taxation after the rental value is abolished
Possible in principle, but under the authority of the relevant canton
What’s changing?
Deduction of demolition costs for new-build replacement
 Residential property taxation until the rental value is abolished
Yes 
 Residential property taxation after the rental value is abolished
Possible in principle, but under the authority of the relevant canton
What’s changing?
Transfer option deductions
Residential property taxation until the rental value is abolished
No 
 Residential property taxation after the rental value is abolished
May be specified by the respective canton 
What’s changing?
Special property tax on second properties
 Residential property taxation until the rental value is abolished
No
 Residential property taxation after the rental value is abolished
Not levied by the federal government Possible – depending on cantonal law

Source: The link will open in a new window Property taxes on second properties at admin.ch

When will the change in system be implemented? The reform will come into force on 1 January 2029, giving the federal government and cantons time to develop and implement the change in system. In principle, the current rules apply up to and including the 2028 tax period. The new provisions will apply from the 2029 tax period.

As a homeowner, who benefits most from the rental value abolition? Who can expect higher taxes?

Whether the abolition of the rental value results in a tax burden or tax relief depends on factors such as the place of residence, interest rate level and individual income. On the one hand, homeowners who have almost or fully paid off their mortgage, have a low mortgage interest rate and have not planned any major maintenance work are likely to benefit the most. On the other hand, around 20 percent of homeowners can expect higher taxes according to a federal government estimate. This especially affects people living in older properties requiring a great deal of renovation work. These people will not be able to claim maintenance and renovation costs, nor – at least with regard to federal tax – will they be able to deduct investments for energy-saving renovations.

For second properties, the result also depends on whether and in what form the canton in question introduces a special property tax.

Approach to maintenance work and debts during the transition period

Many homeowners are considering carrying out maintenance work before the change comes into force. In the case of condominiums, it may be worth considering saving more into any renovation funds. Some may also wish to consider reducing their debt, as interest on debt will no longer be deductible. It is a good idea to carefully analyse your personal situation with specialists.

Should I amortize my mortgage or not?

Amortization is another topic that should concern homeowners with free capital. Personal circumstances and financial planning within the family may also play a role in making this decision. The question that homeowners now face is whether they should repay their mortgage in full or in part. As a general rule, amortization should always be considered carefully and professionally, and tailored to your financial situation. Particularly in the context of imminent retirement, it may make sense to check the amount of future interest and mortgage payments well in advance. If a mortgage is amortized, the money remains tied up in the property and is no longer freely available. Work with a specialist to carefully consider the various alternatives to amortization, such as a financial investment or retirement planning solution, and find out which option is ideal for you.

FAQs

  • The impact of the reform on the public sector will depend heavily on the future level of mortgage rates. The abolition of rental value taxation would lead to a fall in revenue of billions of francs at the federal, cantonal and municipal level if interest rates are low, whereas there would be an increase of billions of francs with high interest rates. With a mortgage interest rate of 1.5 percent, the decrease in revenue is estimated at around CHF 1.8 billion (direct federal tax: CHF 400 million; cantonal and municipal taxes: around CHF 1.4 billion). Second properties account for an estimated CHF 260 million of this. However, with an average mortgage interest rate level of around 3 percent, revenue to the state is expected to rise.

    The link will open in a new window Continue to the explanations of these estimates at estv.admin.ch

    The estimates are uncertain, as certain elements of the reform cannot be worked out due to a lack of data. The longer-term effects of the reform on tax revenues also depend on how private households react to the new tax situation. Decisions made by the cantons also have an impact on the revenue collected from tax. They will determine whether they wish to continue to grant the deduction for energy-saving and environmental protection measures, the deduction for demolition costs with a view to constructing a new building as well as the tax-deductible amount corresponding to the previously mentioned expenses.

  • Revenue from the special property tax on second properties cannot be estimated in advance. It depends on whether and how the cantons or municipalities implement this tax. The exact details have not yet been determined.

  • The reform will have no or negligible direct impact for the majority of tenants. However, if they have liquid assets, such as a larger, partly credit-financed securities portfolio, they may be more affected by the reform because of the limits on the debt interest deduction. That said, this is only a small minority compared to the number of tenants as a whole.

    The reform also affects private landlords, as the debt interest deduction now depends on the composition of their total assets. Debt interest can only be claimed on that part of the assets which is accounted for by rented and leased properties. This means that landlords will be generally less likely to be able to deduct debt interest than they are today. In addition, they can no longer claim deductions for energy-saving and environmental protection measures from their direct federal tax. However, property maintenance continues to be fully deductible for rented properties.

  • If the rental value of second properties is no longer taxed, this can lead to a decrease in revenue when mortgage interest rates are low, particularly in typical tourism cantons with high numbers of second properties such as Graubünden, Valais and Ticino. This is why Parliament wanted to create a compensation option. Under a new constitutional provision, it decided to allow the cantons to levy a special property tax on predominantly owner-occupied second properties. This deviates from the principles of taxation under Article 127 para. 2 of the Federal Constitution (generality and uniformity of taxation, taxation based on economic capacity).

  • Parliament ensured that a transitional provision applies with the introduction of the first-time buyer deduction: if a taxpayer acquired their home for the first time three years before the new regulation comes into force, for example, they may still claim the first-time buyer deduction for seven years after the law comes into force. The amount deducted is not calculated from when the provision comes into force, but from when the property was purchased. This regulation applies only to uninterrupted ownership. If a first-time buyer sells their home and buys a new one a few years later, but not within a reasonable period of time, the transitional provision does not apply.

  • Debt interest should be deductible if it is linked to the generation of taxable income. If the rental value ceases to apply, it is logical to limit the deduction of debt interest.

    The deductibility of debt interest on consumer loans is already unfamiliar to the system today, because the loan – as the name suggests – is typically used to finance consumption, not to generate income. Lombard loans are often used to finance a securities portfolio. This can result in taxable income from assets, but also capital gains that are tax-free in the case of private assets. Parliament has opted for a rather strict rule limiting the deductibility of debt interest.

    The current debt interest deduction is designed as a general deduction. With the reform, debt interest can only be claimed on that part of the assets which is accounted for by rented and leased properties. Even after the reform, it will still not matter what type of debt it is – a mortgage, a lombard loan, or a consumer loan, for example. Although debts can be assigned to a specific property by law, from an economic perspective such an assignment is hardly possible.

  • No. Real estate gains tax is not part of the change in system. It will continue to be levied in accordance with the law of the canton in which the property is located.

    In the event of a sale, the difference between the proceeds of the sale and the taxable investment costs is generally taxed. Investment costs may include the purchase price and value-adding investments in particular. Generally speaking, pure maintenance costs cannot be taken into account again as investment costs.

    The fact that the deduction of maintenance costs is being discontinued in the case of income tax does not automatically mean that, in future, all the relevant costs can be deducted from real estate gains tax. The nature of the expenses and the law of the respective canton are the decisive factors.

    For the tax authorities, the practice is likely to become more challenging: until now, the plausibility of classifying an investment as value-adding in real estate gains tax could be checked by comparing it with the income tax return, as value-preserving maintenance costs were shown separately there. In the case of owner-occupied properties, this reference point will largely be omitted in future, as no maintenance costs will be declared any more. For owners, this means the opposite: in future, receipts for value-adding investments should be stored with particular care so that they can be claimed for real estate gains tax in the event that the property is sold in future. 

FAQ Source: The link will open in a new window Reform of home ownership taxation at efd.admin.ch

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