Imputed Rental Value Switzerland: What It Is and When It Ends

The first time a Swiss tax adviser tells you that you will be taxed on rental income you never received from a tenant who never existed, you assume something has been lost in translation. It has not. The Eigenmietwert — imputed rental value — is a real component of Swiss property taxation that has been in force since 1934, and it affects every homeowner in Switzerland right now. It also just got voted out of existence, but not until 2029.

If you are buying property in Switzerland, understanding this tax is not academic. It directly affects how large a mortgage you should carry, whether indirect amortization through Pillar 3a still makes sense, and whether you should complete any planned renovations before 2029. The stakes run into tens of thousands of francs.

What Is the Eigenmietwert?

The Eigenmietwert is a fictional income figure that the Swiss tax authorities add to your actual taxable income. The theory is this: if you own your home, you receive an economic benefit equivalent to what you would pay in rent if you did not own it. That benefit, the argument goes, should be taxed for parity with renters, who pay rent out of their post-tax income.

The cantonal tax authority calculates the Eigenmietwert by estimating what your property would rent for on the open market, then applying a discount — typically setting the taxable imputed value at 60% to 70% of that full market rent. That discounted figure is added to your other income: salary, investment income, whatever else you earn. You are then taxed on the combined total.

For a standard family apartment in Zurich worth CHF 1.2 million, the market rent might be estimated at around CHF 3,600 per month, or CHF 43,200 per year. At 70% of that figure, the Eigenmietwert could add roughly CHF 30,000 to your taxable income. At combined cantonal and federal marginal rates in the range of 30% to 40% for higher earners, that translates to CHF 9,000 to CHF 12,000 per year in extra tax — on income you never actually received.

The Offsetting Deductions

The original design included a counterweight. Homeowners subject to the Eigenmietwert were permitted to deduct two categories of expense from their taxable income:

Mortgage interest. Because Swiss homeowners typically carry substantial mortgage debt — standard financing covers up to 80% of the property value — the annual interest payments can be large. These interest costs were fully deductible, creating a direct offset against the imputed rental income. This is why Swiss financial culture historically encouraged keeping the first-tranche mortgage (up to 65% of the property value) indefinitely and never repaying the principal: maximum debt meant maximum interest deductions, which offset the Eigenmietwert burden and could produce a net tax saving.

Maintenance and renovation costs. Costs incurred to maintain the property's value — repairs, repainting, replacing heating systems — were deductible. Owners could choose between a lump-sum deduction (a fixed percentage of the property's rental value) or claiming actual costs, whichever was higher.

For a high-earning expat with a large mortgage on a premium property, the Eigenmietwert framework could actually be tax-neutral or even slightly favorable, provided the interest and maintenance deductions roughly matched the imputed rental income.

The September 2025 Vote and Abolition

On September 28, 2025, Swiss voters approved a federal decree to abolish the Eigenmietwert for owner-occupied primary and secondary residences. The vote passed with 57.7% in favor, ending a tax that has been politically contested for decades. Critics had long argued the system was inequitable — it penalized middle-class homeowners who had paid off their mortgages, since their interest deduction disappeared while the imputed income remained.

The abolition applies to both primary residences and holiday homes, which was significant because a version of the reform that covered only primary residences had previously failed at the ballot box.

What Changes in 2029 — and What It Means for You

The reform does not take immediate effect. Cantons need time to adapt their tax codes, and a transition period is legally required. The abolition will officially take effect on January 1, 2029. Until that date, the current system continues in full: you declare your Eigenmietwert, and you can deduct your mortgage interest and maintenance costs.

From 2029 onward:

• You will no longer pay tax on the fictional rental income of your primary or secondary residence
• You will no longer be able to deduct mortgage interest payments
• The ability to deduct routine maintenance and renovation costs will be severely restricted or eliminated at the federal level (cantons retain some discretion)

For property owners without a mortgage, this is straightforwardly positive. For owners with large mortgages — the typical situation for an expat buyer financing 80% of a CHF 1 million to CHF 1.5 million property — the calculation is more complex.

The Mortgage Strategy Shift

The traditional Swiss strategy of carrying a large, permanent first-tranche mortgage and using indirect amortization via a Pillar 3a account was built entirely around the tax logic of the Eigenmietwert framework. The high mortgage balance generated high interest deductions that offset the imputed rental income, while Pillar 3a contributions reduced taxable income further. Once both deductions disappear in 2029, maintaining a large perpetual mortgage loses most of its tax rationale.

Financial advisers in Switzerland are already urging buyers entering the market now to re-examine their amortization plans. The first-tranche mortgage (up to 65% of property value) has never legally required repayment, but post-2029 there is no longer a tax incentive to carry it indefinitely. Buyers who would have maintained CHF 650,000 in first-tranche debt for decades may find it makes more sense to begin paying it down after 2029 — something that was previously discouraged.

The Renovation Window

The current deductibility rules allow homeowners to claim major maintenance and renovation costs against taxable income. That window closes in 2029 at the federal level. If you are planning significant renovations — replacing an aging heating system, upgrading insulation, renewing the kitchen — completing those works before 2029 allows the costs to be deducted against income while the deduction still exists.

This is a planning consideration, not a reason to rush into unnecessary renovations. But if work was already in the budget for 2027 to 2030, the timing decision now has a clear tax dimension.

Secondary Residences and the New Cantonal Tax

The reform also introduced a constitutional provision allowing cantons that are heavily reliant on tourism to introduce a new Objektsteuer — a cantonal property tax specifically targeting secondary and holiday residences. This compensates those cantons for the revenue lost when Eigenmietwert on second homes disappears. Alpine cantons with significant foreign-owned holiday property inventories are expected to use this provision. The rates are not yet set and will vary by canton.

If you are considering a holiday chalet in Valais or a ski apartment in Graubünden, watch this space. The overall tax burden on secondary residences post-2029 is uncertain until these cantonal rates are published.

What You Need to Do Now

If you are in the process of buying, or have recently bought, in Switzerland:

1. Understand your current obligations until 2029. You must declare the Eigenmietwert on your Swiss tax returns each year until the reform takes effect. This is a legal obligation, not optional.

2. Reassess your mortgage amortization plan. If you are carrying a large first-tranche mortgage purely for the interest deduction, model what your tax position looks like post-2029 without that deduction. The right answer will vary depending on your overall income and canton, but the standard "never repay the first tranche" advice needs re-examining.

3. Plan renovations strategically. If significant value-preserving work is on the horizon, a 2026 to 2028 timeframe captures the remaining deductibility window.

4. Consider the second-home cantonal tax risk. If you are buying a holiday property in an Alpine tourist canton, factor in the possibility of a new annual cantonal property tax emerging post-2029.

The Eigenmietwert reform is just one of several structural changes affecting Swiss property buyers in the current market. The Buying Property in Switzerland — Expat Guide covers the full picture: from Lex Koller eligibility through to cantonal closing costs, the two-tranche mortgage system, and the Pillar 2 pension decision — everything you need before you commit to a purchase.

At a Glance: Eigenmietwert Before and After 2029

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