The imputed rental value is a taxable income in kind that arises from the use of your own apartment or house. This value is based on the rent that you could earn if you rented out the property. In return, you can claim the mortgage interest and maintenance costs as a deduction in your tax return.
The taxation of imputed rental value has long been critically questioned as it taxes a fictitious income. Furthermore, the current system creates incentives for private debt, as a high level of external financing results in tax deductions. Following numerous previous attempts to abolish the imputed rental value, discussions about it are once again taking place in federal circles.
Specifically, owner-occupied residential property at the main residence will no longer be subject to tax on imputed rental value. In return, mortgage interest and maintenance costs may no longer be deducted. It is still up for debate whether a complete system change should be implemented, i.e. whether the imputed rental value on second properties should also be abolished, whether debt interest may continue to be partially deducted and to what extent energy-saving and environmental protection deductions should continue to be possible. The abolition of the imputed rental value on second properties is particularly problematic for the mountain cantons due to the large number of vacation homes. A general abolition of all private debt interest deductions would in turn result in undue hardship for owners of second properties and investment properties held as private assets, who would still have to pay tax on the income.
Bern is currently still discussing whether the impending abolition of the imputed rental value could take place in the near future and, if so, in what form. Nevertheless, you should consider the upcoming changes regarding imputed rental value and in particular the associated deductions if you are planning major investments in and maintenance work on your own property in the near future. We will be happy to assist you with appropriate tax planning.
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