Imputed rental value: what is it and how is it calculated?

1. What is the imputed rental value?

Since 1934 in Switzerland, anyone who owns residential property and lives in it must pay tax on what is known as the imputed rental value, which is declared as fictitious income. This tax is payable at both the federal and cantonal levels.

The value is based on the income that you would receive as the owner if you rented out your property. It is determined by the canton and applies to homeowners and condominium owners.

2. Why does imputed rental value exist?

Homeowners are considered to be financially better off than tenants by virtue of the fact that they pay no rent. In addition, they deduct mortgage interest and maintenance costs from taxes, giving them a tax advantage.

The imputed rental value compensates for this advantage and is intended to ensure more tax fairness.

However, this tax regulation is politically controversial. Many homeowners feel that the tax on the imputed rental value is unfair, as it is levied on a fictitious income.

3. Taxes: how do I calculate the imputed rental value?

Calculating the imputed rental value is governed on a cantonal basis. In most cantons, the imputed rental value corresponds to approximately 70% of the market rental value.

In this overview of the Federal Department of Finance (FDF), you can find the calculation basis for your canton (not available in English). If you have any questions, contact the relevant tax authority in your canton.

Depending on the canton, these factors can influence the imputed rental value (list not exhaustive):

• Market rental value

• Market value of the property

• Wealth tax value

• Insured value

• Cadastral value

• Living space

• Net floor space

• Year of construction

• Location and surrounding area

• Local rent level

• Individual living situation

• Standard of construction

4. Can I adjust the imputed rental value?

Have your housing needs changed, leaving some rooms in your house unused? If so, you may be able to claim a lower imputed rental value. This may be possible when a child moves out or in the event of a divorce, for example.

However, if the now-empty rooms are still used – for example as guest bedrooms or hobby rooms – you cannot claim a lower value. You are also not entitled to a reduction for holiday apartments.

5. What applies to holiday homes and vacant properties?

Holiday apartments or holiday homes are also subject to tax. If you also rent out the property, you must pay income tax on any rental income. However, you can have your own imputed rental value reduced for this period.

Even if the property is vacant or not used, there is tax liability. An exception exists if the property cannot be used as a result of objective, external circumstances. Properties that demonstrably cannot be rented or sold are also excluded.

6. What conditions apply to rented properties?

Many homeowners rent out their property and therefore receive an annual rental income. In this case, a fictitious or notional tax does not apply, but a factual one: all rental income is taxable as income.

The net rental income is taxed. This is the rental income generated minus the deductible costs. These include maintenance costs, mortgage interest or administrative costs charged by third parties.

Where do I have to pay tax on my rental income?

If you rent a house or apartment, you must tax the resulting rental income in the canton in which the property is located. The amount of the tax depends on the tax rate of the canton and the commune.

7. Will the imputed rental value ever be abolished?

There are currently no plans to abolish imputed rental values. There have always been efforts to abolish or change the system, though all attempts have failed until now, whether from the Federal Council, the National Council, the Council of States or through public initiatives.

The National Council and the Council of States continue to advocate for a change in the imputed rental value system – but they are pursuing different approaches.