On 28 September 2025, the people and the cantons clearly approved the introduction of special cantonal property taxes on second properties with a majority of 57.7% of the votes. This is linked to a change in the system of taxation on residential property, namely the abolition of the imputed rental value on owner-occupied first and second properties. This article takes a closer look at the tax implications of the reform for homeowners:
- No taxation of imputed rental value
Until now, homeowners had to pay individual income taxes on a notional rental value, known as imputed rental value, as income for their own use of the property. With the adoption of the reform, this taxation will be abolished.
- No deduction of property maintenance costs
In future, the effective (but also lump sum) maintenance costs for owner-occupied properties can no longer be claimed as a reduction in individual income tax. At federal level, this also applies to costs related to investments in energy-saving and environmental protection measures. The cantons may continue to allow the latter deduction, but only until the greenhouse gas balance is offset and until 2050 at the latest.
- Restriction on the deduction of debt interest
Once the changes come into force, debt interest can only be claimed to a very limited extent: a debt interest deduction is only permitted for rented or leased properties in Switzerland. The deduction of private interests is limited to the proportion of the value of the rented or leased properties in relation to the total assets (gross). It is irrelevant whether the mortgage was taken out on the owner-occupied property or on the rented or leased property. To promote home ownership politically, interest deductions remain in place for a limited period and amount when purchasing residential property for permanent and exclusive owner-occupancy for the first time.
- Introduction of a special property tax
The cantons are now eligible to introduce a special property tax for owner-occupied second properties. The cantons are given considerable leeway in this regard: they determine the assessment bases, tax rates and any allowances within the constitutional framework.
The future tax burden for taxpayers of owner-occupied properties will depend significantly on individual circumstances. The consequences will vary depending on the location, condition and financing of the property. The reform may have a particularly adverse effect on taxpayers who own their property without any other rented or leased properties and who have taken out mortgages with high interest rates.
The reform is not expected to come into force until 2028 at the earliest. Fortunately, the Finance Department of the Canton of Zurich has announced that, based on the voting results, it intends to abandon the increase in imputed rental values planned for 1 January 2026.
From a tax planning perspective, we recommend reviewing your own loan situation and possibly required maintenance and closely following the cantonal legislative process in the location of your (second) property. As the reform will not come into force for a few years, tax improvement measures may still be taken now.