System change for imputed rental value: Abolition comes into force on January 1, 2029

Tax system change and deduction restrictions

With the abolition of the imputed rental value, the taxation of the notional rental income as income is eliminated—a significant relief for owners with low mortgage debts. At the same time, however, key counterparts are also abolished: the mortgage interest deduction for owner-occupied property as well as deductions for maintenance costs and energy-efficient renovations at the federal level are discontinued. Only first-time buyers benefit from a temporary special rule for mortgage interest. For the real estate market, this means a shift of incentives away from tax-driven indebtedness towards faster repayment of home loans.

Transitional strategy for maintenance and renovations

Until the end of 2028, the current tax rules will remain unchanged, opening a window for optimization. Those planning major renovations such as window or roof refurbishments should ideally bring these projects forward into the years 2026 to 2028, in order to fully benefit from the tax deductibility of maintenance costs. Investments in photovoltaic systems or heat pumps will also only benefit from the guaranteed federal deduction until the system change. Strategically staggering these projects over the next three tax periods allows the breaking of tax progression before deduction options are massively restricted from 2029.

Amortization mechanics and indirect financing

The elimination of mortgage interest deduction changes the attractiveness of indirect amortization via pillar 3a. While this model remains advantageous until 2028 due to the double tax benefit (deduction of 3a contributions and mortgage interest), it loses its appeal from 2029 onwards. Borrowers should check whether a gradual direct amortization to reduce interest costs will be more economically sensible after the system change. Since banks’ calculated affordability remains unchanged at 4.5% to 5%, but tax relief through interest is disappearing, a solid equity base becomes more important as a stability factor compared to tax optimization models.

Second homes and cantonal special taxes

For holiday property owners, the situation remains complex. The reform provides that cantons can introduce a special property tax on second homes to compensate for the abolition of the imputed rental value in tourist regions. While primary residences will receive tax relief from 2029, second-home owners in cantons such as Valais or Graubünden could face new flat-rate taxes. In this transition phase, monitoring cantonal legislation and reviewing the loan-to-value ratio (target under 65%) is essential to adjust financing costs to the new tax reality.