What could the abolition of the imputed rental value look like?

Those who live in their own apartment or house pay tax on the imputed rental value as taxable income. This corresponds to the rent that the property could generate. The imputed rental value is considered unfair by many and has therefore been criticized for a long time. Now, the parliament has started a new attempt to abolish it. However, other tax deductions would probably also disappear with it.

The imputed rental value, hated among property owners, could soon be abolished. There have been several attempts at a system change in the past, which mostly failed because the tax deductions for maintenance costs or mortgage interest were to be retained, thereby favoring owners over renters. Now it seems that the affected parties might be able to compromise. The Economic Commission of the Council of States has published their proposal for the abolition of the imputed rental value and the associated opinions. They want to abolish the imputed rental value on owner-occupied residential property at the main residence. However, it would remain for secondary residences, thus avoiding losses in cantons heavily affected by this like Graubünden or Valais. At the same time, maintenance deductions and, at the federal level, energy-saving deductions would also disappear. Regarding the future treatment of mortgage debt interest, the Economic Commission proposed five different variants, all of which contain at least a ten-year interest deduction for first-time buyers. Under current law, mortgage interest can be deducted from taxes as a balance to the imputed rental value, but this provides an incentive not to settle these debts and is one of the reasons for the high mortgage debt of Swiss households.

Following the proposal of the Economic Commission comes the legislative draft and parliamentary processing. Should the parties agree and the legal amendment come about, a referendum could still be initiated, which is why the earliest expected implementation of the new system would be by 2022 or 2023.

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