Zurich
Reform of taxation of residential property: Overview of the impact – relevant not only for property owners
Swiss voters approved the reform of homeownership taxation in the Swiss nationwide referendum held on 28 September 2025.
After decades of political debate, this system change affects not only owners of self-occupied residential property. Due to the abolition of the additional deduction for private debt interest expenses of up to CHF 50.000 the reform will have consequences for all Swiss taxpayers.
Key changes at a glance
Imputed rental value
Current Rules
A notional rental value for self-occupied main and secondary residences is taxed as income.
New Rules
Completely abolished — no longer any taxation of owner-occupation.
Deductions for maintenance and insurance
Current Rules
Costs may be deducted at federal, cantonal and municipal levels for both self-occupied and rented properties.
New Rules
Deductions are abolished at all levels for self-occupied properties.
Deductions for energy-saving measures or demolition costs in view of replacement construction
Current Rules
Costs may be deducted at federal, cantonal and municipal levels for both self-occupied and rented properties.
New Rules
Deductions are abolished at federal level for self-occupied properties. Cantons may decide whether to maintain or abolish them.
Deductions for heritage conservation work and third-party property management costs
Current Rules
Costs may be deducted at federal, cantonal and municipal levels for both self-occupied and rented properties.
New Rules
Deduction remains at federal level. Cantons may decide whether to maintain or abolish them.
Interest on debts (mortgages, loans, consumer or lombard credits)
Current Rules
Deduction of all private debt interest expenses up to the amount of taxable investment income plus additional CHF 50.000.
New Rules
Deduction for private debt interest expenses is abolished. Only limited deduction for first-time buyers of self-occupied property during the first ten years and a proportional deduction for rented properties corresponding to the ratio of rented properties to total assets.
Cantonal property tax on self-occupied secondary residences
Current Rules
Secondary residences are taxed via the imputed rental value.
New Rules
Cantons may introduce own property tax on self-occupied secondary residences.
Illustrative example: Deductibility of debt interest
Mr. Meier owns a house and an additional holiday home in Switzerland, both self-occupied. He also owns other properties in Switzerland and abroad that are rented out. His total private debt amounts to CHF 10 million, generating interest expenses of CHF 195.000. In addition, he has been granted a loan from his own company (M AG), on which he pays CHF 4.500 interest per year, and a private loan from his uncle with annual interest payable of CHF 500.
Consequence of the new regulation assuming the following assets:
| Asset | Market value (CHF) | Share of total assets |
|---|---|---|
| Residential property, Switzerland | 1.500.000 | 10% |
| Holiday home, Switzerland | 750.000 | 5% |
| Rented properties, Switzerland | 5.250.000 | 35% |
| Rented properties, abroad | 2.250.000 | 15% |
| Other financial assets | 5.250.000 | 35% |
| Total assets | 15.000.000 | 100% |
The proportion of rented properties located in Switzerland represents 35% of the total assets. Accordingly, debt interest expenses amounting to CHF 68.250 may be deducted from the taxable income of Mr. Meier. The remaining debt interest expenses of CHF 131.750 are not tax-deductible.
The interest paid by Mr. Meier on the loan from M AG as well as on the private loan granted by his uncle can no longer be deducted for tax purposes, even though the corresponding interest income remains taxable for the respective lenders.
Summary: Who wins – and who loses?
Winners
- Owners with no or low mortgage debt: no more imputed rental value, no taxation of notional rent
- First-time buyers of self-occupied homes: temporary interest deduction for ten years
Losers
- Owners with high mortgage debt: loss of interest deduction
- Owners of older properties: no more deductions for maintenance or renovation
- Individuals without real estate but with high private interest on debts: loss of debt interest deduction
Recommended actions
- The legislative amendments are not expected to take effect before 2028. There is therefore still time to analyze one’s individual situation and consider preparatory measures based on the following aspects:
- Advance renovations: Implement maintenance or energy-efficiency measures before the reform is entering into force in order to still benefit from tax deductions.
- Review of financing strategy: Early analysis of mortgage levels and interest structures.
- Monitoring of cantonal developments: Cantons may introduce new property taxes or maintain deductions.
- Individual tax planning: An individual analysis is especially valuable for taxpayers with several properties or substantial mortgage debt (private vs. business financing, direct vs. indirect ownership).
Proactive planning will be crucial to avoid disadvantages and optimize opportunities.
We would be pleased to assist you in assessing your specific tax situation.
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