Taxes

The imputed rental value is a notional income that you must declare for tax purposes when you occupy a property you own (in other words, “rent you pay to yourself”).

Under the current system, you can deduct a number of expenses in return, in particular:

• Mortgage interest / debt interest
• Maintenance and renovation costs that preserve the property’s value
• Additional cantonal deductions (energy, environmental measures, etc.), depending on the canton

The imputed rental value on owner-occupied residential property will be abolished — meaning you will no longer have to pay tax on a notional rental income for your own home.

In return, certain deductions for owner-occupied property will be removed:

• Maintenance costs (value-preserving expenses) can no longer be claimed for owner-occupied properties.
• The mortgage interest deduction will be significantly restricted or abolished altogether — with exceptions: for investment properties (rented properties), the interest deduction will remain possible.
• For first-time buyers, a limited mortgage interest deduction will be permitted for a period of ten years, decreasing annually (for example through a tiered model).
• For rented properties, the existing rules will largely remain in place (interest deduction and taxation of rental income continue to apply).
• For secondary residences, an additional property tax may be introduced or is foreseen in order to compensate for lost tax revenues.

Implementation timeline: at the earliest, the imputed rental value will no longer be taxed from the 2028 tax year onward.

Assuming you purchase a new property completed in 2026 and finance it with a mortgage of CHF 1,320,000 at an interest rate of 1.6%, the following illustrates how your tax situation may change under the current system compared to the planned reform of the imputed rental value — based on an approximate estimate for the Canton of Zurich.

Assumptions

Purchase price of property: CHF 1.6 million
Mortgage: CHF 1.32 million (82.5% financing)
Interest rate: 1.6% fixed → approx. CHF 21,120 per year
Imputed rental value: In Zurich typically around 3.5–4.5% of market value → for this example, CHF 55,000 per year (in reality it may be slightly lower)
Maintenance: Lump sum of 1% of purchase price → approx. CHF 16,000 per year
Tax rate (municipality + canton Zurich): approx. 28% marginal tax rate (middle income level)

Current system with imputed rental value

You must declare the imputed rental value of your property as taxable income.
In return, you may deduct your mortgage interest and (part of) your maintenance expenses.
In favourable situations, the deductions for interest and maintenance may exceed the imputed rental value, resulting in a tax benefit (i.e. you effectively pay less tax).
However, since the interest rate of 1.6% is relatively low, the imputed rental value may be higher than your interest costs (depending on canton and property value), which can lead to a net tax burden.

Current tax burden with imputed rental value

Imputed rental value: + CHF 55,000 taxable income
Deductions:
Mortgage interest: – CHF 21,120
Maintenance: – CHF 16,000
Total deductions: – CHF 37,120
Balance: 55,000 – 37,120 = CHF 17,880 additional taxable income
Taxes: 17,880 × 28% ≈ CHF 5,000 per year in tax burden

With the reform (from the 2028 tax year or upon entry into force)

Assuming the reform is implemented as proposed:

The imputed rental value on owner-occupied property will be abolished → no more taxation of notional rental income.
The mortgage interest deduction will generally be abolished or significantly restricted for owner-occupied property.
Deductions for value-preserving maintenance costs will also be abolished for owner-occupied property.
For first-time buyers, a transitional rule applies: a limited mortgage interest deduction for ten years, decreasing annually.

Tax impact

Imputed rental value: abolished → + CHF 0
Deductions: mortgage interest and maintenance deductions abolished (only a limited deduction for first-time buyers, e.g. 50% of interest in the first year, decreasing thereafter).
Balance: CHF 0 taxable income (without transitional rule)
Taxes: CHF 0 additional burden

With transitional rule:

Assuming you may deduct 50% of interest in the first year → CHF 10,560 deductible.
Tax saving: 10,560 × 28% ≈ CHF 3,000

Comparison — before and after

Today: approx. CHF 5,000 annual tax burden
After reform (without transitional rule): CHF 0 → clearly more favourable
After reform (with transitional rule): even slightly more advantageous, as partial interest deductions remain available for a limited period

No — the abolition applies specifically to owner-occupied residential property. For investment properties, meaning properties that you rent out, the current system remains in place: rental income continues to be taxed, and expenses may still be deducted.

The change of system involves significant reductions in deductible items: maintenance costs (value-preserving expenses) can no longer be claimed for your owner-occupied home. The mortgage interest deduction for owner-occupied property will also be heavily restricted or may disappear entirely.

Yes — a transitional provision is planned for so-called “first-time buyers.” Anyone purchasing residential property for the first time will be able to benefit from a limited mortgage interest deduction for a period of ten years. This deduction is structured on a declining basis, meaning it gradually decreases over time.

Absolutely. If you hold a property as an investment and rent it out, very little changes for you. You will continue to declare the actual rental income for tax purposes, and in return you may still deduct mortgage interest and maintenance costs as usual.

For secondary residences, the reform foresees that a property tax may be introduced. The purpose of this measure is to compensate for potential tax losses resulting from the abolition of the imputed rental value.

The current timeline foresees implementation from the 2028 tax year at the earliest. Until then, taxation will continue to follow the existing system.

In most cases, yes — especially if your current interest burden is lower than the imputed rental value. While you often have to declare additional taxable income under the current system, this burden will disappear after the reform, resulting in a balance of CHF 0.

This provision provides a real benefit at the beginning: in the first year, for example, you may still be able to deduct 50% of your mortgage interest. With a mortgage of CHF 1.32 million at an interest rate of 1.6%, this would correspond to a tax saving of around CHF 3,000 — an additional advantage on top of the abolition of the imputed rental value.