Swiss Eigenmietwert Referendum Approved: What the Property Tax Reform Means for You

Switzerland has approved a major tax reform that will fundamentally change how property owners are taxed. In the referendum of September 28, 2025, voters decided to abolish the imputed rental value (Eigenmietwert) system that had been in place for decades. This change has significant implications for all Swiss property owners, especially expats.

What Was the Eigenmietwert Referendum About?

The referendum of September 28, 2025, involved two interconnected proposals:

1. Constitutional Amendment: Second Home Property Tax

Voters approved a constitutional amendment allowing cantons to introduce special property taxes on second homes (Zweitliegenschaften). This was the only part that appeared on the ballot.

2. Federal Law: Abolition of Eigenmietwert

Linked to this constitutional change is a federal law that abolishes the imputed rental value taxation for all owner-occupied properties. Because the constitutional amendment passed, this law will come into effect together with it.

Current Eigenmietwert System

Under the current system, Swiss property owners must:

• Pay tax on imputed rental income - The theoretical rental value of their property is added to their taxable income
• Deduct maintenance costs - Property maintenance, insurance, and management costs are tax-deductible
• Deduct mortgage interest - Interest payments on mortgages are fully deductible
• Deduct renovation costs - Energy efficiency improvements and renovations are deductible

Approved Changes: What Will Change?

Following the approval, the following changes will occur once the reform takes effect:

For Owner-Occupied Properties

• No more imputed rental value taxation - The theoretical rental income would no longer be taxed
• No more maintenance deductions - Property maintenance costs would no longer be deductible
• Limited mortgage interest deductions - Only first-time buyers would get mortgage interest deductions
• No renovation deductions - Energy efficiency improvements would no longer be deductible (federal level)

For Rental Properties

• Maintain current system - Rental properties would continue to be taxed on actual rental income
• Keep all deductions - Maintenance, insurance, and management costs remain deductible
• Keep mortgage interest deductions - Interest payments remain fully deductible

Timeline and Implementation

With the referendum approved on September 28, 2025, the implementation now proceeds as follows:

Transition Period

The Federal Tax Administration (ESTV) has indicated that cantons will be given a transition period of at least 2 years to implement the changes. This means:

• Earliest implementation: January 1, 2028
• Current system continues: Until implementation, the current Eigenmietwert system remains in place
• Gradual transition: Cantons will have time to adjust their tax systems

Impact on Different Property Types

Single-Family Homes (Owner-Occupied)

Property owners would benefit from:

• No more imputed rental value taxation
• Simplified tax calculations
• Reduced tax burden for high-value properties

But would lose:

• All maintenance cost deductions
• Mortgage interest deductions (except for first-time buyers)
• Renovation cost deductions

Multi-Family Houses (Mixed Use)

For properties with both owner-occupied and rental units:

• Rental units: Continue to be taxed on actual rental income with full deductions
• Owner-occupied units: No imputed rental value, but no deductions for that portion
• Shared costs: Cantons will need to develop allocation methods for shared expenses

First-Time Buyers

New property owners would receive special treatment:

• First-time buyer deduction: CHF 5,000 (single) or CHF 10,000 (married) in the first year
• Decreasing deduction: 10% reduction each year for 10 years
• Mortgage interest: Limited deductions based on property value ratio

Financial Impact Examples

What This Means for Expats

For expatriates in Switzerland, the changes would have significant implications:

Tax Planning Opportunities

• Property purchase timing: Consider buying before the changes take effect
• Renovation planning: Complete energy efficiency improvements before 2028
• Mortgage strategy: Consider mortgage structure and timing

Cross-Border Considerations

• Home country reporting: Changes may affect how property is reported in your home country
• Tax treaty implications: May impact double taxation relief
• Exit planning: Consider implications if planning to leave Switzerland

Arguments For and Against

Arguments For the Change

• Simplification: Eliminates complex imputed rental value calculations
• Fairness: Treats owner-occupied and rental properties differently
• Administrative efficiency: Reduces tax administration complexity
• Property ownership promotion: Makes homeownership more attractive

Arguments Against the Change

• Revenue loss: Significant reduction in tax revenue for cantons
• Unfair treatment: Different rules for similar properties
• Maintenance incentives: Loss of tax incentives for property maintenance
• Complexity: Creates new complexity in mixed-use properties

Preparing for the Changes

If you're a property owner, consider these steps:

Before the Referendum (2025)

• Review your current situation: Calculate your current tax burden
• Plan major renovations: Complete energy efficiency improvements before 2028
• Consider property purchases: Timing may be important
• Consult professionals: Get advice on your specific situation

After Implementation (2028+)

• Update tax planning: Adjust your tax strategy
• Review property portfolio: Consider the impact on your investments
• Monitor cantonal changes: Stay informed about local implementation

Conclusion

The approved Eigenmietwert reform represents one of the most significant tax changes in recent Swiss history. It will fundamentally change how property owners are taxed, with winners and losers depending on individual circumstances.

For expatriates, the changes could significantly impact Swiss tax planning and property investment strategies. It's crucial to understand the implications and plan ahead of the transition.