Imputed rental value: explanations and calculation methods
Imputed rental value is one of the most distinctive features of the Swiss tax system when it comes to real estate. Since 1934, this so‑called “notional” income has required owner-occupiers to be taxed on a benefit they do not receive in cash, but whose value is very real: the theoretical rent of their home. On 28 September 2025, the Swiss people approved the abolition of this taxation, but note: the reform will not apply before 2028 at the earliest. Understanding how imputed rental value is calculated therefore remains essential for any homeowner or prospective buyer.
Understanding the logic behind imputed rental value
A notional income that raises questions
Imagine you buy your home. Logically, you receive no rent because you are the one living there. Yet the tax authorities consider that you benefit from an economic advantage equivalent to the rent you could have collected if you had rented out your property. This advantage is a “benefit in kind”, and it is taxed in the same way as a salary or bank interest.
The Federal Supreme Court has set a clear framework: imputed rental value must represent between 60 % and 70 % of the market rent. It is deliberately not aligned with 100% of the rent, because an owner who occupies their home does not derive exactly the same economic advantage as a landlord receiving actual rental income. The use of the property is comparable, but the absence of collected income justifies a partial assessment of the theoretical rent.
The rationale behind the system
This logic took hold as early as the 1930s, at a time when authorities were seeking to restore a form of tax fairness between tenants and homeowners. An owner-occupier effectively makes a significant monthly saving by not paying rent. Without taxing this advantage, they would benefit from a much more favourable tax treatment than a tenant in a comparable situation.
The system is therefore based on a balance between imputed rental value, which is treated as income but comes with tax offsets, and the possibility for homeowners to deduct their mortgage interest and their maintenance costs.
Methods that vary widely from one canton to another
Three main schools of calculation
The Confederation gives cantons some leeway to set the imputed rental value they deem appropriate. As a result, the same property can be assessed very differently depending on its location, and three main approaches can be distinguished.
To start with, eleven cantons apply the so-called “comparative rent” method, where the idea is to compare your property with similar homes on the rental market and apply a coefficient of 60 % to 70 %. The cantons concerned are as follows:
- Appenzell Innerrhoden and Ausserrhoden,
- Glarus,
- Graubünden (Grisons),
- Lucerne,
- St. Gallen,
- Schaffhausen,
- Schwyz,
- Ticino,
- Uri,
- Valais.
In addition, seven cantons (Aargau, Bern, Fribourg, Jura, Nidwalden, Obwalden and Thurgau) have chosen a hedonic model, a method that breaks your property down into measurable characteristics: location, year of construction, surface area, amenities.
The remaining eight cantons (Basel-Landschaft, Basel-Stadt, Geneva, Neuchâtel, Solothurn, Vaud, Zug and Zurich) have developed their own hybrid systems.
A few examples by canton
Zurich and its asset-based system
In Zurich, the first step is to calculate the taxable value of your real-estate assets (building value plus land value). Then a rate is applied: 3.5 % for single-family houses, 4.25 % for apartments.
For example, let’s take a house built 20 years ago.
- Building value: CHF 800’000.
- Land value: CHF 410’000.
- Total: CHF 1’210’000.
For a single-family house, you multiply by 3.5 %, which gives CHF 42’350 in annual imputed rental value. However, be careful: if the “base value” (determined by the GVZ building insurance) exceeds CHF 120’000 for a house, additional calculations come into play.
Geneva and the rental market
Geneva refers directly to the rental market. This year, for a 4.5-room apartment (120 m²) in the city centre, the market rent is around CHF 3’500 per month, i.e. CHF 42’000 per year. Geneva then applies 70 % of that rent, resulting in an imputed rental value of CHF 29’400 per year.
Vaud and its tariff zones
In the canton of Vaud, the calculation is based on dividing the territory into several tariff zones. As a result, for a house of around 150 m², the differences can be significant. In zone 1, around Lausanne or along the lakeshore, imputed rental value generally falls between CHF 35,000 and CHF 45,000 per year. It tends to drop to between CHF 25,000 and CHF 35,000 in suburban areas, and between CHF 18,000 and CHF 28,000 in rural regions, according to the 2025 Vaud scale.
Tax deductions: what can you recover?
The current system
Imputed rental value comes with tax deductions that can significantly reduce its impact. During the transitional period, which is expected to run until 2028, these mechanisms remain fully applicable.
Mortgage interest therefore remains fully deductible. By way of illustration, a mortgage of CHF 850,000 at a rate of 1.5 % generates around CHF 12,750 in deductible interest per year, based on the average SARON rates observed in December 2025 by the Swiss National Bank.
Maintenance costs: two possible options
When it comes to maintenance costs, two approaches are available to you.
The first is to apply a lump-sum deduction, generally between 10 % and 20 % of the imputed rental value, depending on the age of the property. This is the simplest solution, although it can be limited when major works have been carried out.
The second option allows you to deduct actual costs, provided you can substantiate them. This includes renovation or repair works (façade, windows, roof, technical installations, painting), as well as certain recurring costs linked to the property, such as property insurance or chimney sweeping.
Deductible works vs value increase: a sometimes delicate boundary
This is where the distinction becomes essential, because only works aimed at preserving the value of the property are deductible. Investments that create added value are not.
In practice, the boundary can nevertheless be blurred. A bathroom renovation, for example, may partly fall under routine maintenance and partly under an upgrade in standard. In that case, only the portion corresponding to preserving the value is accepted as a deduction by the tax authorities.
The exception for ecological investments
However, there is an important exception to this principle. Ecological or energy-related investments remain deductible, even when they increase the property’s value. This includes, in particular, equipment intended to improve the home’s energy efficiency, such as solar panels, heat pumps or enhanced insulation.
These expenses benefit from an incentive-based tax treatment intended to encourage the energy renovation of the housing stock. One limit remains, however: in most cantons, these deductions are generally only possible from five years after the property was built.
Strategies during the transition
With the announced abolition, the current period becomes strategic, and those planning major renovations have every interest in carrying them out before the reform. Indeed, today a renovation of CHF 80’000 can generate a tax saving of CHF 16’000 to CHF 24’000 depending on your marginal rate (20-30 %), but this saving will disappear after the reform.
What does the 2025 reform change for you?
The content of the approved text
The abolition of imputed rental value above all changes the overall balance. For primary residences, and in some cases for secondary residences, taxation of the notional income disappears, and in return, deductions linked to routine maintenance costs are abolished for these properties.
Another change is that renovation works will, in principle, no longer be tax-deductible. Some exceptions remain, however, such as expenses linked to the preservation of monuments, which remain deductible at the federal level. In addition, cantons retain the option of maintaining deductions for energy renovations until 2050.
For rented-out properties, the regime remains unchanged, which means rental income remains taxable, and maintenance costs remain deductible under the rules in force.
The most notable new feature concerns first-time buyers, who now benefit from a specific mechanism in the form of a temporary deduction on mortgage interest. This amounts to CHF 5,000 for a single person and CHF 10,000 for a married couple, for a maximum period of ten years, with the amount decreasing by CHF 1,000 each year.
For multi-property owners, the deductibility of interest on passive debt becomes more complex with a “restrictive proportional deductibility”. In other words, if you own several properties, you will only be able to deduct your interest pro rata to your real-estate assets (excluding the primary residence) relative to your total wealth.
Who wins, who loses?
The reform primarily benefits homeowners who have already largely amortised their loan, often retirees or long-standing owners. For them, abolishing imputed rental value results in a significant tax reduction, while the disappearance of deductions has a limited impact because their costs are already low.
First-time buyers, especially in urban regions where imputed rental values are high, also come out rather well. The disappearance of this notional income, combined with the new temporary mortgage-interest deduction mechanism, materially improves their tax position. Owners of newer properties requiring little maintenance are also among the profiles that benefit.
Conversely, owners of older homes who will need to carry out major renovations risk being penalised. The end of deductions makes it impossible to obtain tax relief for works often amounting to several tens of thousands of francs. Highly leveraged multi-property owners are also among the potential losers, as the proportional limitation on mortgage interest reduces their scope for tax optimisation.
Finally, the situation for secondary residences will largely depend on choices made by the cantons. By way of example, if Valais were to introduce a real tax of 1.5 ‰ on market value, a chalet valued at CHF 1 million would generate CHF 15,000 in annual taxes, an amount that could exceed the taxation linked to the former imputed rental value.
When and how to challenge your imputed rental value
Tax authorities periodically reassess imputed rental value, generally every five to ten years depending on the canton. These updates can sometimes lead to significant increases, especially when values have not been adjusted for a long time.
Several reasons may justify a challenge:
- Factual errors, such as an incorrect living area, or an incorrectly recorded number of rooms
- Unaccounted changes, such as a parcel split or the existence of easements
- Nuisances (noise, pollution, neighbourhood deterioration) that may influence the value
- Actual under-occupation of the home, for example after a divorce or when children move out, when certain rooms remain permanently unused. The criteria set by the Federal Supreme Court are nevertheless strict. The rooms concerned must be truly unoccupied: they must neither be furnished nor used, even occasionally. Under-occupation must also be long-term and must not result from a temporary situation.
The process is regulated but accessible. You should first carefully review the tax assessment decision, then gather supporting evidence: listings of comparable properties, photographs, floor plans or official documents. A written objection must then be filed within thirty days, clearly setting out the reasons and attaching the necessary supporting documents.
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