Blick explains everything homeowners need to know: Is imputed rental value now tilted?

Imputed rental value – what exactly is it?

Imputed rental value has been around for over 100 years. It is calculated based on the apartment’s size, location, year of construction, and other criteria and is offset against homeowners’ income on their tax returns. The imputed rental value usually corresponds to 60 to 70 percent of the income that an owner would earn if he did not occupy the apartment or house himself, but rented it out.

Why should imputed rental value disappear?

“The imputed rental value is an old braid that needs to come off,” says FDP national councilor Daniela Schneeberger (55). Commoners find this tax on notional income disadvantaged homeowners. Even if they can make various deductions as compensation – for example for maintenance work and mortgage interest. In addition, the current system creates the wrong incentives: “Nowadays it pays to take on debt. This is reflected in the fact that private debt in Switzerland is very high,” says Center National Councilor Leo Müller (64).

What do the opponents say?

The left-wing parties are also calling for the abolition of the imputed rental value. “But if you want to abolish it, all tax deductions that homeowners can make today should also be abolished,” says Green National Council member Michael Töngi (56). He is very critical of the proposal that is now on the table.

What exactly does the proposal look like?

Six years ago, the Economic Commission of the Council of States made a new attempt to abolish the imputed rental value. At the end of 2021, the small chamber was finally able to agree on a solution. In the National Council, however, that failed last year. The Economics Committee has now reached a compromise. This stipulates that homeowners no longer have to pay tax on the imputed rental value, but may only make two deductions in return: for activities related to monument care and for mortgage interest deduction – the latter deduction must be lower than now. There should also be a temporary deduction for new homeowners.

What would this option cost?

Estimates are very difficult. The federal government estimates that the proposal currently being debated would generate CHF 220 million less tax revenue per year. That while the average mortgage interest is 3 percent. So homeowners would save. But if interest rates continue to rise, the federal government and the cantons will eventually make a plus with the elimination of imputed rental value.

What is the chance that the National Council will also agree to the abolition?

The discussion on Thursday will be heated. It involves several details. The bottleneck, for example, is whether the imputed rental value should also be abolished for second homes or not. The Economic Commission of the National Council recommends this to its council – the Council of States opposes it. The deduction for mortgage interest is also a major problem. How much more is allowed? The left is also reluctant to accept the “entirely alien to the system” deduction for neo-homeowners. Even the Owners’ Association warns against overloading the load. While many important little things are still disputed, the National Council should eventually agree on a solution.

And then?

The last word has not yet been spoken on Wednesday. After the National Council, the Council of States will again work with the template. But ultimately, the voters must come into play. Because it is now almost certain that the referendum will be held against the bill.