Imputed Rental Value & Renovations

Imputed rental value abolished – renovate now or wait?

After Swiss voters agreed to abolish the imputed rental value, Swiss homeowners are facing a fiscal turning point. With the reform likely taking effect from fiscal year 2028, the question is whether to bring forward planned renovations – and how to finance them sensibly. This article explains what homeowners should now consider and how to best proceed.

With the reform of owner-occupied property taxation passed in September 2025, one of the most significant changes to the Swiss tax system in decades is approaching. In the future, not only will the taxation of the imputed rental value be abolished, but the ability to deduct maintenance costs and mortgage interest from taxable income will also be eliminated.

What may seem like a mere administrative adjustment is, in fact, a turning point. The reform fundamentally alters the financial balance between homeownership, external financing, and maintenance. The imputed rental value will disappear, but so will the tax leverage that has previously made many renovation projects economically viable. Those who wait now risk missing out on this final window of opportunity.

The new regulation is not expected to come into effect before the 2028 fiscal year. However, many homeowners are already beginning to reevaluate their renovation strategies, and rightly so.

Current tax system vs. reform

Homeowners are currently required to pay tax on a notional income – the so-called imputed rental value – but in return, they can deduct maintenance costs and mortgage interest. In practice, however, the taxable imputed rental value often exceeds the potential deductions, meaning that property owners are usually subject to additional tax burdens despite these offsets.

Going forward, this offsetting will be eliminated entirely: neither the imputed rental value nor mortgage interest or maintenance costs will be considered for tax purposes. Only energy-efficiency upgrades and heritage conservation work will remain deductible for a transitional period, depending on the canton.

Renovating, but in time

Whether it makes sense to bring forward renovation projects depends on one's individual situation. In most cases, it is likely to be more tax-efficient to carry out planned work before the reform comes into effect. The scale of the potential benefit can be illustrated with an example: an owner is planning to renovate the kitchen and bathroom over the next few years – at a total cost of around CHF 50,000. Under the current tax regime, depending on the canton and tax rate, this could result in up to CHF 17,500 in tax savings. Once the reform is implemented, this advantage will disappear entirely.

The example clearly illustrates how much previous deductibility has influenced investment decisions and why many homeowners are now likely to bring renovations forward deliberately. But what happens if everyone has the same idea?

"Now everyone wants to renovate quickly." A renovation boom with consequences

In Switzerland, renovations and refurbishments worth billions of francs are carried out each year – and this trend is on the rise. Over the past ten years, the volume of renovations for single-family homes has increased by an estimated average of around 4% per year.

This trend is expected to accelerate significantly before the reform comes into effect. According to Wüest Partner, a surge in activity is anticipated during the transition period, with growth multiplying by three to four times the previous rate – equivalent to an increase of 14% to 17% in 2026 alone.

Many homeowners will want to take advantage of the remaining years of tax deductibility. In the short term, this is likely to lead to shortages and price increases for tradespeople and construction services – especially in the areas of heating, plumbing, roofing, and interior renovations.

The effect will probably be most pronounced in the final tax year before the reform takes effect, driven by a last minute boom that could put significant pressure on the capacity of craftsmen and supply chains.

Those who delay taking action risk responding when it is too late.

Plan renovations now before everyone else does

Even if you don’t intend to carry out your renovation for another two years, it’s wise not to wait until the market overheats. When tens of thousands of homeowners decide to renovate at the same time, tradespeople will be fully booked for months, and those with available capacity are likely to raise their prices.

Planning early secures not only better terms but also gives you the freedom to choose your partners. Skilled craftsmen and planners are rarely available at short notice. Careful preparation – from condition assessment and obtaining quotes to scheduling – provides planning certainty and prevents stress when demand peaks.

One thing is clear: those who act too late pay more, wait longer, and lose flexibility over their project.

How to finance a renovation without sufficient equity

Many homeowners are aware that renovations are necessary – yet it is often financial limitations rather than lack of willingness that pose the real challenge. A new kitchen, bathroom, or energy-efficient upgrade can quickly cost CHF 30,000 to CHF 40,000. For most households, it is hardly realistic to cover such expenses entirely from their own funds without depleting their reserves.

However, a lack of liquidity does not have to be an obstacle. Those who have their property assessed in a timely manner can often extend their existing mortgage. Banks tend to be receptive to increasing financing for value-enhancing or energy-efficiency renovations, as these investments reduce energy consumption, maintain the property’s condition, and increase its market value.

The key requirement is that both the property’s market value and the borrower's affordability allow for an increase. In many cases, this enables a more comprehensive renovation without placing undue strain on equity.

Renovation as an opportunity to restructure financing

Anyone considering increasing their mortgage in connection with a renovation should take the opportunity to review their overall financing. A renovation project is often the ideal time to renegotiate existing credit arrangements – especially if an adjustment of the mortgage volume is imminent anyway.

Comparing different offers can be beneficial on two fronts: not only can better terms be achieved, but refinancing with a higher loan volume can also provide additional liquidity for more extensive renovations or supplementary investments.

Many homeowners discover that a financial restructuring during the renovation process can solve several issues at once – from interest expenses to improved financial flexibility in the years ahead.

Public subsidies – helpful, but not a given

Energy-efficient renovations are supported in Switzerland at all levels – federal, cantonal, and municipal. Homeowners who upgrade their property according to GEAK standards or demonstrably reduce CO₂ emissions can benefit from subsidies amounting to several thousand Swiss francs.

However, the landscape of subsidies is complex. Responsibilities, criteria, and deadlines vary from canton to canton. Many applications must be submitted before construction begins and require detailed documentation. Those who apply too late or submit incomplete paperwork may quickly forfeit their entitlement.

Subsidies are therefore not a guarantee, but an opportunity for those who seek information early and align their renovation projects with eligible criteria. When used correctly, subsidies can reduce total costs by 10% to 20%.

Example: How a renovation can be financed

To use the initial example for illustration purposes: a planned renovation costing CHF 50,000 can, by utilizing public subsidies, a mortgage increase, and tax deductibility, be financed with just approximately CHF 19,000 in own funds.

The figures shown are based on experience and may vary from case to case. However, the example demonstrates that by combining various sources and planning early, you can achieve significantly more than your initial liquidity might suggest.

Conclusion: Reform is certain – Preparing for it is voluntary, the consequences are not

The abolition of imputed rental value is more than just a tax adjustment; it fundamentally changes the financial logic of homeownership. Those who plan their renovations strategically benefit twice: from the remaining tax advantages now and from more stable costs in future.

The window of opportunity is limited: until 2028, it remains possible to optimize renovations for tax purposes and complete projects before the expected surge in demand. Acting now provides planning certainty and avoids having to make decisions later under time and cost pressure.

We support you with planning, financing, and implementation

Whether you are focused on preserving value, increasing comfort, or maximizing tax efficiency, renovations are a complex interplay of planning, financing, and timing. Our experts can help you take a holistic view of your situation, develop the right financing strategy, and set the right course early on.

Talk to us before you invest – to ensure your renovation is not only more beautiful but also economically sound.