The course has been set for higher property taxation in the canton of Zurich. At the beginning of 2024, the Zurich cantonal government authorised the Directorate of Finance to conduct a consultation on the draft of an amended directive on the “Valuation of properties and determination of imputed rental values”. The deadline for submitting comments expired on 8 May 2024. Time for a categorisation of the planned revaluation and an outlook.
Why are properties in the canton of Zurich being revalued?
The revaluation of properties was originally initiated by Zurich courts, which found that the low imputed rental and property tax values in the canton of Zurich were in breach of the case law of the Federal Supreme Court. In addition, an expert opinion commissioned by the Zurich cantonal tax authority stated that the market values of Zurich properties have risen by an average of 50% and rents by 15% since the last valuation in 2009.
What is the impact of the revaluation of properties in the canton of Zurich?
The revaluation of properties in the canton of Zurich should result in property tax values of around 70-100% of the market value and imputed rental values of around 60-70% of the market rent. Compared to the 2009 valuation, property tax values are expected to increase by an average of 49% (48% for condominiums) and imputed rental values by 11% (10% for condominiums). As a result, the tax burden for property owners in the canton of Zurich will increase. The valuation method remains basically unchanged, but the classification of the location classes, the number of location classes and the corresponding parameters (building land prices, capitalisation rate for apartment buildings, different percentages per municipality on how the imputed rental value is calculated from the property tax value, etc.) have been adjusted. The categorisation of the new provisional location classes can be viewed in the GIS browser.
Are there any ways of opposing the revaluation?
There is currently no way to take action against the higher values. Owners of properties in the canton of Zurich must wait until the revaluation has been carried out. We recommend that you discuss the preparation of your 2025 tax return with your tax advisor and declare what you believe to be the correct value. Although the leeway is rather small, it is conceivable that in exceptional cases, for example, the categorisation of the property in the location class may not be appropriate. In such cases, however, it is to be expected that legal action will have to be taken with the assistance of a tax advisor.
What was the outcome of the consultation?
Insofar as the opinions of municipalities and organisations were published at all, the homeowners’ associations of the Canton of Zurich and the Winterthur region (hereinafter “HEV”) stand out in particular. In 14 points, they explain why they reject the changes to the revaluation of properties in the canton of Zurich. Among other things, the HEV criticises the fact that the increase in imputed rental values should be suspended until there is clarity about the abolition of imputed rental values at federal level. They are also calling for a second opinion and a reduction in imputed rental values for long-term homeowners (as they are at a disadvantage compared to long-term tenants). It can be assumed that the political municipalities and cities will approve the amended directive on the revaluation of properties in the canton of Zurich as of 2025, as the additional tax revenue is considerable.
What happens next?
It can be assumed that the results of the consultation process will be published in the coming months. It is currently unclear whether and to what extent the comments will be taken into account in the final directive. What is certain is that the new values will apply from the 2025 tax period. We therefore expect that this timetable will be adhered to and that the tax authorities of cities and municipalities will send out the new valuations by the beginning of 2026.
It remains to be seen whether the demands from the consultation process will be taken on board and how the tax authorities will deal with resistance regarding the new imputed rental and property tax values.
If you have any questions about the revaluation of properties in the Canton of Zurich, please do not hesitate to contact the authors.
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