Imputed rental value: what is it and how is it calculated?
Do you live in your own property? Then you must pay tax on the imputed rental value, which is declared as fictitious income. Comparis explains what you need to know.
06.02.2024
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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.
Put simply, you pay income tax even if you don’t earn income from your home ownership.
2. Why does the imputed rental value exist?
Homeowners don’t pay any rent and can thus save money. In addition, they may deduct mortgage rates and maintenance costs from their taxable income. This means that homeowners would have a tax advantage without countermeasures.
The imputed rental value should compensate for this advantage and provide more fairness in the distribution of taxes.
Save on tax with mortgages
You are taxed on the imputed rental value. However, you may deduct mortgage rates from your taxes. As a result, it can be worth taking out a mortgage for tax reasons.
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 – i.e. the amount that could be achieved if the property was rented out.
These factors are decisive (depending on the canton).
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
You can find your canton’s calculation basis in this overview. If you have any questions, contact the relevant tax authority in your canton.
Example: imputed rental value calculation in the canton of Zurich
In the canton of Zurich, the imputed rental value of a property is generally 3.5% (single-family home) or 4.25% (apartment) of the property tax value.
For a 20-year-old, single-family home, the costs could look like this:
| Property tax value | CHF 1,210,000 |
|---|---|
| of which 3.5% = imputed rental value | CHF 42,350 |
The base value makes things more complicated
In Zurich, if the base value is over 40,000 francs for an apartment or over 120,000 francs for a single-family house, other calculations apply. The base value is determined by Gebäudeversicherung des Kantons Zürich (an independent company that insures all the canton’s buildings against fire damage and natural hazards). If you are unsure, contact the Zurich Cantonal Tax Office.
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. 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.
This article was first published on 20.03.2019
