Equivalent rent: Why you should renovate now

In Switzerland, the financial benefit of rent-free housing for homeowners is taxed by the government through the imputed rental value. The Swiss people recently voted to abolish this imputed rental value. At first glance, this sounds like good news. But here’s the bad news: The ability to deduct property costs for tax purposes will also disappear along with the imputed rental value. Anyone renovating after January 1, 2029, will no longer be able to claim these costs for tax purposes. So, if you still want to take advantage of this, you shouldn’t wait too much longer.

Only value-preserving measures that offset wear and tear – thus serving the pure maintenance of the home – are tax-deductible. Without them, the property would lose value. In contrast, value-enhancing investments that create additional benefits or increase the property’s value aren’t deductible. Here’s a general and non-binding overview with actual examples.

As a general rule: Replacing something existing with something of equivalent value is tax-deductible. Purchasing something completely new or a major upgrade is not. Yet the distinction isn’t always that simple – and we recommend having things clarified and assessed by an expert.

• When an oven reaches the end of its useful life, replacing it is considered a maintenance of value and may be replaced with an appliance in the same price and performance class. If a steamer’s also installed, it’s not tax-deductible.
• If you replace your old toilet with a modern shower toilet, you may only deduct the amount that a standard toilet, including installation, would have cost.
• Replacing cabinets and countertops in the kitchen is considered a measure to maintain value; additional cabinets or significantly more expensive materials are not.
• Energy-efficient renovations are an exception: Measures such as thermal insulation or replacing an oil-fired heating system with a heat pump are tax-deductible, even though they technically enhance the property’s value.

• If possible, spread your renovation work over several tax years. This way, you can break the tax progression.
• Plan your renovation work early. Due to the abolition of the imputed rental value, contractors in Switzerland are currently in high demand.
• Besides good planning, it’s also worth reviewing your financing options early on. With the right loan for homeowners, you can be flexible in carrying out your renovation.

• Swiss Tax Conference (SSK): Here you’ll find specific guidelines for your canton of residence.
• Homeowners Association (HEV): Here you’ll find comprehensive information on property maintenance and the tax treatment of renovations.
• Abolition of imputed rental value: All details on the implementation timeline.