Abolition of Imputed Rental Value in 2029: What Owners Should Plan Now

The reform of residential property taxation will enter into force on 1 Januaryyyyyy 2029. For owners now counts not only the future tax bill, but the right order of upkeep, energy investments, amortization and financing.

Home rental value abolition 2029: what has been decided

The Federal Council has put into effect the reform of residential property taxation on 1 Januaryyyyyy 2029. From this date onwards, the taxation of the imputed rental value will be waived in the case of own-used first and second home ownership. At the same time, the system of deductions is fundamentally changing.

Mayntenance costs for owner-occupied residential property can no longer be deducted from the federal government, cantons and municipalities. In the case of rented or leased properties, the deduction of maintenance costs remains. The general deduction of debt interest is restricted and depends on the ratio of their value to the total assets in the case of rented or leased properties.

For first-time acquirers, a time and amount limited deduction of debt interest is provided. Direct federal tax eliminates deductions for energy-saving and environmentally friendly investments; Cantons may continue such deductions temporarily. The concrete effect therefore remains individually and cantonally different.

Who is likely to benefit – and who needs to calculate more accurately

Owners with a largely amortized mortgage and manageable maintenance requirements can benefit from the elimination of imputed rental value taxation. Their previous debt interest and maintenance deductions were often smaller than the taxable imputed rental value. With low mortgage rates, this effect tends to be stronger.

It can look different with high debt, high interest rates or larger planned renovations. Those who claim significant deductions today lose part of this tax relief. Even households with scarce liquidity should not amortize for tax reasons alone, if this makes the reserve for maintenance and life events too small.

A blanket statement is therefore dubious. A comparative calculation is required for the years up to 2028 and from 2029 – with income, assets, mortgage, maintenance planning, canton and use of the property.

Correct timing of reorganisations

The reform creates a clear planning horizon. Anyone who intends to carry out major value-preserving work on the roof, facade, windows, building technology or interior design anyway should check whether implementation before 2029 is technically, financially and tax-wise. The tax deduction must never be the only reason for the decision.

Restructuring needs advance. condition analysis, GEAK Plus, variant comparison, application for funding, financing, planning and approval can take months. Applications for funding must often be submitted before construction begins. Anyone who wants to complete tax-relevant work by the end of 2028 should therefore start significantly earlier.

Artificial advance laying can be uneconomical if components still have a long remaining service life or an overall refurbishment later offers better synergies. A life cycle assessment is correct: technical necessity, energy consumption, comfort, subsidies, taxes and property value go together.

Rethinking Mortgage and Amortization

With the change of system, the tax deductibility of private debt interest loses part of its previous significance. However, this does not automatically speak for maximum amortization. Liquidity, provision, alternative returns, future investments and post-retirement sustainability remain crucial.

Owners should not consider their mortgage in isolation. Anyone who closes a fixed-rate mortgage with a long term shortly before 2029 is committed to the system change. Who one SARON Mortgage holds, remains more flexible, but bears interest rate risk. A sensible strategy can combine tranches, direct or indirect amortisation and an investment reserve.

For people close to retirement, it must also be checked whether the bank continues to confirm the sustainability after lower earned income. Early planning creates options; a short-term enforced amortization, on the other hand, can unfavorably tie up assets.

Secondary properties and cantonal differences

The imputed rental value is also waived for self-used second properties. However, the new constitutional provision allows the cantons a special property tax on mostly self-used second homes. Cantons with many holiday apartments can use this opportunity to partially compensate for loss of income.

The location question thus remains important. Owners of holiday apartments should observe the cantonal implementation and not only consider the federal tax. Possible cantonal deductions for energy investments can also be designed differently.

For mixed-use or temporarily leased objects, a clean demarcation is particularly important. Use, rental contracts and costs should be documented in a comprehensible manner; for the specific tax treatment a qualified tax advice is involved.

Roadmap to 2029

2026 is the year for inventory and scenarios: merging tax records, mortgages, maintenance history and building condition. In 2027, major renovation options, GEAK, funding and financing should be concretized. 2028 serves the timely implementation of meaningful early work and the final coordination of the financing structure.

In parallel, an annual update is worthwhile. Interest rates, cantonal rules, construction costs and personal goals can change. The plan should therefore be resilient, but not rigid.

OWNY structures these issues along real estate, financing, taxes, project and time horizon. For binding tax statements, the competent specialist is involved.

What documents now belong together

For planning, the latest tax assessments, mortgage contracts, amortisation plans and evidence of investments should be merged. In addition, there are building insurance values, renovation history and a realistic condition of the important components.

This documentation facilitates three decisions at the same time: Which works are technically due, which expenses would still be deductible in the current system and which liquidity is needed after 2029? Without this overall view, tax, financing and construction decisions are unnecessarily separated.

For condominium ownership, protocols, renewal funds and community investment plans are particularly important. Individual owners cannot determine the time of a facade or roof renovation alone; Decisions need preparation and majorities.

Even after a professional model calculation, the future remains uncertain. Therefore, a corridor with base case, burden case and opportunity case makes sense. It makes visible which measures are robust and where new decisions can be made later.

Frequent questions

When will the imputed rental value be abolished in Switzerland?

The reform will enter into force after the decision of the Federal Council on 1 Januaryyyyyy 2029.

Can I still deduct maintenance costs from 2029?

In the case of owner-occupied residential property, the deduction of maintenance costs is not applicable. In the case of rented or leased properties, it remains.

Should I Amortize My Mortgage Because of the Reform?

Not flat-rate. Tax impact, liquidity, provision, investment needs and sustainability must be considered together.

What changes for second properties?

Here, too, the imputed rental value is eliminated. However, cantons can introduce a special property tax on mostly self-used second homes.

Further real estate insights

The new rental value system influences restructuring, financing and the use of provision capital. These contributions complement the strategic assessment:

• Energy-efficient renovation Switzerland: promotion, GEAK and real estate value
• SARON or Fixed Mortgage 2026: Which strategy fits?
• Pension fund for residential property: early withdrawal or pledging?