In short Until the end of 2028, nothing changes. From 2029 the imputed rental value goes, and most deductions for your home go with it. At low interest rates, most owners will pay less tax; at high rates, more.
What is the imputed rental value?
The imputed rental value is the rent you would pay for your home if you rented it. Owners who live in their own home pay income tax on this amount today. In return, they may deduct mortgage interest and upkeep.
The canton sets the imputed rental value. It is usually well below the market rent. According to the Federal Supreme Court, however, it may not fall below 60 % of the market rent.
What changes from 2029?
The reform affects the Confederation, the cantons and the municipalities. The main points:
| Topic | Until end of 2028 | From 1 January 2029 |
|---|---|---|
| Imputed rental value, own home | taxed as income | abolished |
| Imputed rental value, second home | taxed as income | abolished; canton may levy a new property tax |
| Mortgage interest, own home | deductible | no longer deductible, except first-time buyer deduction |
| Upkeep, own home | deductible | no longer deductible |
| Energy saving and environment | deductible | not for federal tax; cantons may allow time-limited deductions until 2050 |
| Listed-building conservation | deductible | stays deductible |
| Rented property | rent taxed, deductions possible | unchanged; interest only deductible pro rata |
| Wealth tax | on the tax value | unchanged |
The first-time buyer deduction
Buyers of their first home get transitional relief. They may deduct part of the mortgage interest for ten years. For the direct federal tax these maximums apply:
| Year after purchase | Married couples | Single people |
|---|---|---|
| 1 | CHF 10’000 | CHF 5’000 |
| 2 | CHF 9’000 | CHF 4’500 |
| 3 | CHF 8’000 | CHF 4’000 |
| 5 | CHF 6’000 | CHF 3’000 |
| 10 | CHF 1’000 | CHF 500 |
After that, the deduction ends. It only applies to the home you live in, not to holiday homes.
Interest on rented property
If you rent out a flat, you can still deduct interest. From 2029, though, only pro rata: in proportion to your rented property’s share of your total assets. If you rent out a flat worth CHF 800’000 and own CHF 1 million in total, you may deduct 80 % of your interest.
Who wins, who loses?
That depends mostly on the interest rate.
- At low rates, most owners pay less tax. The imputed rental value they no longer pay tax on is larger than the deductions they lose. This is especially true for pensioners with a largely repaid mortgage.
- At high rates, most owners pay more. They can no longer deduct the high interest. The first-time buyer deduction softens this only for new buyers.
The Confederation estimates that, at a mortgage rate of about 1.5 %, the reform costs around CHF 1.8 billion in tax a year. From a rate of about 3 %, it brings the state extra revenue instead.
What buyers can do now
- Plan renovations. Upkeep on your home is deductible until the end of 2028. Larger work tends to pay off for tax before 2029.
- Rethink amortisation. When interest is no longer deductible, a large mortgage is less attractive for tax. A smaller mortgage can make sense.
- Check affordability. The bank still calculates with 5 % interest, 1 % upkeep and one third of income. Our affordability calculator shows which price suits you.
- Compare places. Income and wealth tax remain. They vary by more than double between municipalities. All cantons compared are in our guide to taxes.
- Ask the canton about holiday homes. Each canton decides whether to tax second homes and how much.
Still open
The Confederation and the cantons settle many details in the implementing provisions. These include the exact line between upkeep and conservation work and the tax on second homes. We will update this guide once they are fixed.
Frequently asked questions
When will the imputed rental value be abolished?
On 1 January 2029. The Federal Council set this date in spring 2026. Until the end of 2028, today’s system with imputed rental value and deductions applies.
Can I still deduct mortgage interest after 2029?
For the home you live in, generally not. The exception is the first-time buyer deduction. If you rent out property, you can still deduct interest, but only in proportion to the rented property’s share of your total assets.
What is the first-time buyer deduction?
If you buy your first home and live in it, you may deduct part of the mortgage interest for ten years. For the direct federal tax, the maximum in the first year is CHF 10’000 for married couples and CHF 5’000 for single people. The maximum falls each year by 10 % of the starting amount.
Is it worth renovating before 2029?
Often, yes. Upkeep on a home you live in is deductible until the end of 2028, but not afterwards. If you are planning a renovation anyway, finishing it by 2028 can save tax. Check the timing with your tax adviser.
What changes for holiday homes?
The imputed rental value also goes for second homes. In return, cantons may introduce a special property tax on second homes that are mainly used by their owners. This mainly affects mountain and tourist cantons.
Sources
General information, not tax, legal or financial advice. Without guarantee.