Eigenmietwert Switzerland Explained: The Imputed Rental Tax, the 2028 Abolition, and What Changes for Homeowners

Every year, Switzerland taxes its homeowners on money they never received. The Eigenmietwert — literally "own rental value" or imputed rental value — requires you to declare the theoretical rent you would earn if you leased your owner-occupied home to a tenant, and add a baseline of 60% to 70% of that figure to your taxable income. You pay income tax on this phantom income.

If you are buying a home in Switzerland now or in the next few years, understanding the Eigenmietwert and the reform that will eliminate it in 2029 is essential for structuring your finances correctly. The abolition sounds like straightforward good news. It is not quite that simple.

Where the Eigenmietwert Comes From

The Eigenmietwert was not introduced as a punitive tax on homeowners. It was introduced in 1934 as an emergency federal measure during the Great Depression, designed to create horizontal equity between renters and owners in the income tax system.

The logic runs like this: a renter pays rent with after-tax income. A homeowner who does not pay rent effectively receives an economic benefit equivalent to a rent-free tenancy — they are deriving income-equivalent value from their asset without paying for it in cash. To equalize the tax treatment between these two groups, the authorities impute a rental value to the owner-occupied home and tax it as if it were received income.

To soften the blow, homeowners are permitted to deduct two specific categories of expenses from their taxable income in exchange for declaring the Eigenmietwert: mortgage interest payments and the cost of value-preserving maintenance (repairs, painting, heating system servicing, and similar work that maintains but does not improve the property).

How the Eigenmietwert Is Calculated

The cantonal tax authority establishes the imputed rental value for each property based on an estimated market rent, applying a standard discount so that the taxable imputed income equals approximately 60% to 70% of what the property would realistically rent for on the open market.

The discount exists because the law has always recognized that taxing the full market rent as income would be excessive. Cantons have some discretion in setting this discount factor, which is why Eigenmietwert rates vary slightly across the confederation.

For a concrete example: if your property in Zurich would realistically rent for CHF 36,000 per year (CHF 3,000 per month), the cantonal authority might set the Eigenmietwert at 70% of that figure, producing CHF 25,200 of imputed income added to your taxable total. If you hold a CHF 700,000 mortgage at 1.0% interest, your deductible mortgage interest is CHF 7,000 per year. Net taxable imputed income after the deduction: CHF 18,200.

In a canton with a combined income tax rate of 25% on marginal income, that is an additional annual tax burden of approximately CHF 4,550 from the Eigenmietwert alone. For a CHF 1.5 million property with a larger mortgage, the numbers scale significantly.

Why the System Encourages Carrying Debt

One of the more counterintuitive effects of the Eigenmietwert system is that it creates a strong incentive to maintain the largest possible mortgage for as long as possible. The larger your outstanding mortgage debt, the larger your annual mortgage interest deduction, which directly offsets the Eigenmietwert income obligation.

This is why Swiss homeowners — including many high-earning expats — traditionally carry their first-tranche mortgage (covering up to 65% to 67% of property value) indefinitely without any legal obligation to repay the principal. Paying down the first-tranche debt reduces your interest deductions and increases your net taxable Eigenmietwert exposure without any immediate offsetting benefit. The Swiss financial culture of holding substantial mortgage debt throughout homeownership is not irresponsible — it is a rational response to the tax architecture.

The 2025 Vote and the 2029 Abolition

In a historic turning point, Swiss voters approved the abolition of the Eigenmietwert for primary and secondary residences on September 28, 2025. The measure passed with 57.7% of the popular vote — a decisive margin in Swiss referendum terms.

The abolition is not yet in effect. Cantons require time to adapt their tax codes, and the implementation deadline is January 1, 2029. Until that date, the old system continues to apply in full: you declare the imputed rental value, pay income tax on it, and deduct mortgage interest and maintenance expenses.

From January 1, 2029, the imputed rental value disappears from your tax return. No more phantom income tax.

However, the reform is a double-edged change, and financial advisors are emphatic about this point. The abolition of the Eigenmietwert comes with the simultaneous elimination of the key deductions that offset it. After 2029, homeowners will no longer be able to deduct mortgage interest or routine maintenance and repair costs from their taxable income. The deduction for energy-efficiency renovation work is being debated, with some cantons likely to retain limited versions of this deduction to encourage green retrofitting.

What Changes for You After 2029

The post-2029 world looks structurally different for Swiss property owners.

For buyers with low or paid-off mortgages, the abolition is a net positive. No imputed income to declare, and the loss of interest deductions is irrelevant if you have no mortgage interest to deduct.

For buyers with large mortgages — the standard position for anyone financing at 80% LTV — the calculation is more nuanced. The Eigenmietwert burden disappears, but so does the mortgage interest deduction that offset it. If your interest deductions currently exceed your Eigenmietwert exposure (possible if you have a large first-tranche mortgage at relatively low interest rates), you may actually see your net taxable income increase after 2029.

For the indirect amortization strategy — where you deposit amortization payments into a pledged Pillar 3a account rather than repaying the bank directly, maintaining maximum mortgage interest deductibility — the value of this approach is significantly diminished after 2029. Without a mortgage interest deduction to optimize, the financial incentive to keep the first-tranche mortgage permanently leveraged weakens considerably.

This has prompted many Swiss financial advisors, as of 2025–2026, to recommend that buyers entering the market now consider a more aggressive amortization strategy for the first tranche in anticipation of the 2029 transition. Paying down the mortgage before 2029 means you carry smaller debt at the point when the deductibility disappears, reducing the post-reform disadvantage.

The Secondary Residence Impact

One element that passed with less public discussion is a constitutional amendment embedded in the 2025 reform that allows cantons with significant tourism economies to introduce a new compensatory property tax (Objektsteuer) specifically targeting second homes. This was designed to offset the cantonal tax revenue lost when Eigenmietwert taxation on secondary residences was abolished.

For expats who own vacation properties in Alpine cantons — in Valais, Graubünden, or Bern's Bernese Oberland — this compensatory tax is an additional post-2029 holding cost to model. The rates and thresholds have not been finalized in all cantons as of mid-2026, but the legislative framework permits cantons to impose them and several have signaled their intention to do so.

Non-resident foreign buyers who own holiday homes under the Lex Koller quota system are fully subject to Swiss cantonal taxes. The Eigenmietwert abolition affects them as much as Swiss residents, and the new compensatory property tax on secondary residences will apply to their vacation properties in participating cantons.

Practical Implications for Buyers Entering the Market Now

If you are buying a primary residence in 2026, 2027, or early 2028, you have a limited window to structure your finances under the existing system. Until 2029, mortgage interest remains deductible, and the indirect amortization strategy through Pillar 3a retains some of its tax appeal.

The key decisions to make before 2029: whether to accelerate amortization of the first-tranche mortgage while you still benefit from the interest deductions, and whether to execute planned renovation or energy-efficiency work on the property while maintenance costs remain deductible.

After 2029, the calculus of Swiss homeownership changes. Carrying large mortgage debt loses its primary tax justification. The balance shifts toward capital repayment and toward buyers who can afford to enter with lower leverage ratios.

For a full financial model of how the Eigenmietwert abolition affects total holding costs under different mortgage structures — including worked examples comparing the pre-2029 and post-2029 positions — the Buying Property in Switzerland — Expat Guide provides the complete analysis.

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