Mortgage interest deduction: definition
In Switzerland, the mortgage interest you pay on your home loan is generally deductible from your taxable income. This rule applies to both primary residences and certain rental properties.
How is mortgage interest deducted?
In practice, the higher your interest, the larger the tax deduction can be, which reduces your tax burden; this can be an important financial lever. However, you still need to strike a balance between your level of debt, the cost of interest and your other objectives (security, retirement, future borrowing capacity). A poorly calibrated strategy can lead to excessive debt taken on purely for tax reasons. Please note that following the 2025 vote on the abolition of the imputed rental value, the mortgage interest deductions allowed will be modified, canton by canton.
Mortgage interest and your taxable income
A family buys a house for CHF 1,200,000 with a large mortgage. Annual interest amounts to CHF 24,000. Thanks to the deductibility of mortgage interest, this amount reduces taxable income, lowering the tax bill. Their adviser also shows that, over the long term, it may be sensible to repay part of the debt to reduce risk, even if that means giving up part of the tax advantage.
