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Imputed rental value to be abolished only in 2029: the will of the people is respected with delay – seniors are furious, investors are relieved

The Federal Council has decided: the abolition of the imputed rental value in Switzerland will only enter into force on 1 January 2029. This means that the reform of residential property taxation, already approved by the people, will be implemented, but with a longer transition period. The decision has triggered mixed reactions among the construction industry, the cantons and different groups of homeowners.

Complex reform with transition period

The reform will completely abolish the imputed rental value – a notional income that is taxed on owner-occupied residential property. In return, key tax deductions will be abolished, particularly for maintenance, renovations and, in some cases, mortgage interest.
The Federal Council’s main reason for the 2029 deadline is the need for coordination between the federal government and the cantons. These must adapt their tax and administrative systems at the same time, particularly in connection with new regulations relating to second homes. The cantons themselves had also called for a sufficiently long transition period in order to be able to implement the reform in an administratively clean manner.

Construction industry and investors welcome the decision

The postponement has been welcomed by the construction and property industry in particular, as well as by owners with planned investments.
The extended transition phase creates planning security: the previous tax deductions for maintenance and renovations will remain in place until 2029. This makes it easier to plan renovations, energy modernisations and larger construction projects. Industry representatives expect this to provide more stable investment incentives and less uncertainty for current or planned projects.
The timing is also favourable for owners who need to renovate: larger investments can continue to be claimed under the current tax system and be better staggered financially.

Criticism from older homeowners

Many older property owners are much more critical. For them, the decision primarily means a further postponement of the hoped-for tax relief.
Retired people in particular, who have largely or fully amortised their mortgage, have felt that the imputed rental value has been a burden for years. They have to pay tax on a notional income, even though there is no actual cash flow. Many of those affected had hoped for a quicker abolition and see the new time horizon of 2029 as a further delay to a long-announced reform.

Cantons between implementation and administrative challenge

The assessment at cantonal level is also mixed. On the one hand, the later date of abolition provides urgently needed preparation time, but on the other hand, the conversion effort remains considerable. Tax administrations not only have to implement the abolition of the imputed rental value, but also introduce new regulations for deductions, second properties and transitional provisions at the same time.
Coordination throughout Switzerland is particularly challenging in order to avoid differences in taxation between the cantons.

Conclusion: time saved for some, waiting time for others

The Federal Council’s decision postpones the implementation of the reform without changing its substantive direction.

The main beneficiaries are:

Property owners with planned renovations or refurbishments
The construction and property sector will benefit from greater planning certainty
Cantons, which receive additional time for implementation

Disadvantaged, however: