Switzerland’s Property Tax Reform: What Homeowners Need to Know

Swiss homeowners are facing significant changes to their property taxes following a referendum approved on September 28, 2025. The reform abolishes the imputed rental value tax on owner-occupied properties, but introduces a latest special property tax on second homes. This shift impacts homeowners, landlords, and mortgage holders alike. Here’s a breakdown of what you need to know.

The Abolition of Imputed Rental Value

Previously, homeowners were required to pay income tax on a notional rental value, even if they lived in the property themselves. This “imputed rental value” is now being abolished for both primary and secondary residences. Tax Partner explains this change is a core component of the reform.

What’s Changing for Tax Deductions?

The abolition of the imputed rental value comes with changes to existing tax deductions:

• Maintenance Costs: Deductions for property maintenance costs will no longer be permitted at the federal level.
• Debt Interest: Deductions for mortgage interest will be significantly restricted. They will only be allowed for rented or leased properties in Switzerland, and even then, limited to the proportion of the value of those properties relative to total assets.

Should You Accelerate Maintenance Perform?

Many homeowners are considering accelerating planned maintenance work before the new regulations take effect. Florian Schubiger, co-founder of Kredite.ch, suggests that bringing forward value-preserving investments – such as painting, plastering, or plumbing – could be beneficial, as these deductions are currently still permitted. Still, homeowners should be aware of potential price increases due to high demand for tradespeople.

Impact on Older Properties

Owners of older properties requiring significant renovations should carefully consider their options. If a sale is planned, minimal investment in maintaining the property’s condition may be sufficient. UBS economists estimate that around a third of Swiss single-family homes and condominiums require substantial renovation, particularly those built between 1960 and 1990.

Condominium Owners: What to Do?

Condominium owners can still deduct value-preserving investments until the system changes. Schubiger recommends tackling renovations planned for the next five years now. Increasing contributions to the renewal fund is too advisable, as payments for value-preserving investments are currently deductible.

Pillar 3a and Renovation Funding

To fund renovations, it may be advantageous to temporarily reduce or suspend Pillar 3a contributions, taking advantage of the ability to make up missed payments within ten years.

Implications for Owners of Rented Properties

Owners of rented properties will continue to be taxed on rental income and can still deduct maintenance costs. However, the deduction for unused maintenance costs will no longer be available at the federal level, though it may remain at the cantonal level. Deductions for debt interest will be limited to the proportion of rented properties relative to total assets.

Mixed-Employ Properties

The treatment of mixed-use properties (e.g., a three-family house with an owner-occupied unit) will vary by canton, using methods such as living space, room units, or point systems. Deductions for debt interest and maintenance will be applied proportionally.

First-Time Buyer Deduction

A new first-time buyer deduction is being introduced, offering a temporary deduction for debt interest on owner-occupied property. The deduction is capped at 5,000 francs per year for individuals and 10,000 francs for married couples, and will be gradually reduced over ten years.

Mortgage Amortization After the Reform

With the loss of the tax deduction for mortgage interest, amortizing the mortgage (paying it off faster) becomes relatively more attractive. However, homeowners should consider their investment options and whether they can achieve a higher return elsewhere.