Value-preserving investments and taxes: tips

1. What are value-preserving investments?

Value-preserving investments (or renovations) merely serve the upkeep of the home. This means that without these measures, the property would lose value or even become uninhabitable.

Examples of value-preserving investments include a façade renovation, a new roof, the replacement of the heating system or the replacement of a defective water pipe.

The following are also considered value-preserving measures: replacement of built-in kitchen appliances, the maintenance of the garden, etc.

2. What are value-enhancing investments?

Value-enhancing investments create additional benefits and increase the value of a property. Examples include the conversion of the loft or the addition of a garage or conservatory.

3. Which renovation costs can you deduct from your taxable income?

Depending on the type of investment, you can deduct them from taxes and thus benefit from lower taxes.

Value-preserving investments can be deducted from your taxable income

Value-preserving investments fall under maintenance costs. These can be deducted from your taxable income. You can do this in one of two ways:

• You can claim the lump-sum deduction as a flat-rate deduction.

• You can deduct the actual costs abziehen. Dann müssen Sie diese nachweisen können.

Tip: Throughout the year, collect all receipts for renovation costs. If they are higher than the flat-rate deduction at the end of the year, claim the actual costs.

Lump-sum deduction in the cantons

For the lump-sum deduction, the federal government and most cantons distinguish between two different categories: for properties less than ten years old, you can usually deduct 10% of the imputed rental value (or rental income). For older buildings, the rate is 20%.

In Appenzell Innerrhoden, St. Gallen, Vaud and Zurich there is no age limit. 20% is always deductible here.

In the canton of Basel-Landschaft property owners can deduct 20% of their taxable income for properties less than ten years old, and 25% for older properties.

You cannot deduct value-enhancing investments from your taxable income

In principle, you are not allowed to deduct any value-enhancing investments from your taxable income deduct. If you sell the property later sale of the property (after renovation), you may, however, add this additional expense however, add this additional expense to the original purchase price. This reduces the property gain (the ratio of investment costs to selling price).

Here, too, you must be able to produce all the supporting documents. Therefore, you should keep them for a long time.

Exception: energy-saving investments

An exception to value-enhancing investments are energy-saving investments: These can also be deducted from your taxable income deducted.

This includes investments such as the installation of a modern heating system, insulation of the façade or the installation of a solar system. Ask the tax office about deductible ecological renovation measures.

Important: In some cantons, there are waiting periods for energy-saving measures. In Lucerne for example, the installation of a photovoltaic system is not deductible within three years of a new building being constructed.

Some banks offer a reduction on base interest rates for Minergie-certified renovations.

4. Outlook: Abolition of the imputed rental value from 2029

The Swiss electorate has decided on the abolition of the imputed rental value . The Federal Council will implement the reform from 1 January 2029 into force. Until then, the rules on value-preserving investments from this article will continue to apply.

From 2029, the imputed rental value tax will no longer apply. In return, however, the deduction for value-preserving investments will cease. The deduction for energy-saving and environmental protection measures is also eliminated at the federal level – but the cantons are allowed to keep it until 2050 in place. The costs of heritage conservation work.

Tip: Plan major value-preserving renovations before 2029, as long as you can still deduct them from your taxable income.

5. Can you deduct your own work from your taxable income?

No. If you work on your property yourself, you cannot deduct this work as maintenance costs. The reason for this is that your own work is not considered income for tax purposes.

On the other hand, what you actually paid is deductible: material and tradespeople’s invoices. Keep the receipts – you cannot claim a deduction without a receipt.

6. Deductible costs in condominium ownership

As a condominium owner, you can pay into so-called renovation funds. These renovation funds are tax-deductible. The condition is that the money explicitly finances maintenance costs for the communal facilities. 

Please note: If you later pay for maintenance work from these renovation funds, no further tax deductions are permitted for this.

7. Tip: stagger renovation work over several years

For larger projects, it may be worth dividing up the renovation work. If you spread it over several years, you break the tax progression. Tax progression means that whoever has more income pays a higher percentage in taxes than someone with less income.

In such cases, you should plan well and coordinate with each other. Calculate possible tax savings using the Comparis tax calculator.

Attention: The deduction option ends with the tax year 2028 with the abolition of the imputed rental value. Therefore, do not stagger a renovation beyond this year.

Distribution of costs for energy-saving and environmentally friendly measures

Since 1 January 2020, in Switzerland you have been able to spread some investment costs over up to three tax periods This applies to energy-saving and environmentally friendly measures and to dismantling costs with a view to a new replacement building. 

However, this is only possible if the deductible costs in the year of the work exceed the taxable income and thus lead to a negative net income.

8. Ask the tax office if anything is unclear

In practice, value-preserving and value-enhancing measures are often difficult to separate from one another. In addition, in the individual cantons, there are often specific opportunities for tax savings on renovations.

If in doubt, therefore, always contact the tax authority. The cantonal tax offices can inform you about the applicable rules and deductions.