Abolition of the imputed rental value in 2029: who wins and who loses
On 1 April 2026, the Federal Council set 1 January 2029 as the date of entry into force of the reform of residential property taxation. The imputed rental value, the notional income that owner-occupiers have declared for decades, will disappear on that date.
The reform is often presented as a tax gift to homeowners. The reality is less simple. By eliminating the imputed rental value, the Confederation is also withdrawing most of the deductions that went with it.
What the reform takes away
Three tax changes accompany the abolition.
- Maintenance costs: will no longer be deductible for primary and secondary residences. The deduction remains valid only for let or leased properties.
- Mortgage interest: will be deductible only in proportion to let properties relative to total assets. For most owner-occupiers, this means losing the deduction.
- Energy-saving investments: will no longer be deductible for direct federal tax, while the cantons retain some leeway on this point.
The tax advantage will be linked to assets that generate taxable income. Residential property in itself will no longer give entitlement to any deduction.
Not all owners will come out ahead
Some situations will clearly benefit from the reform:
- Owners with little or no debt
- Recent properties, with low expected maintenance costs
- Retirees who have largely paid off their mortgage
For these profiles, the loss of deductions remains marginal compared with the disappearance of a taxable notional income.
Other profiles risk losing out:
- Heavily indebted owners
- Older properties, with high maintenance costs
- Leveraged property portfolios
In these cases, the loss of deductions may outweigh the gain from the abolition.
One exception: the deduction for first-time buyers
A decreasing deduction is planned for new buyers. Those buying their first home in Switzerland will be able to deduct debt interest for ten years, up to a maximum of CHF 10’000 per year for a married couple and CHF 5’000 for a single person, with the limit decreasing each year. For those who bought in the ten years preceding 2029, the mechanism applies to the remaining years.
Cantonal uncertainty over renovation funds
The reform leaves several grey areas, particularly around the renovation funds of condominium ownership (PPE/StWE). Cantonal practices are not yet harmonised, and some tax administrations have indicated that they will keep an eye on large contributions to prevent last-minute optimisation. Before making any early contribution, it is worth checking the practice of the canton concerned.
Plan ahead without rushing
Between now and 2029, owners have time to ask themselves a few questions: debt structure, planning of works, balance between equity and mortgage. A decision taken purely for tax reasons is rarely the right one. A sound analysis brings together the value of the property, the holding horizon, the financing structure and wealth objectives.
Conclusion
A simple comparison between banks or an isolated tax calculation is not enough to shed light on this kind of choice. Comparing market solutions, modelling the effect of the reform on your own situation and structuring a coherent strategy requires an overall view.
That is exactly the work we do at Assidu with our homeowner clients: combining tax, financing, insurance and pension provision in a single analysis. A good decision before 2029 will be one that takes the whole picture into account.
Article written by:
Loïc Tschirren
Head of Mortgage Financing