Resistance to abolition of imputed rental value: Who really benefits?

Resistance to abolition of imputed rental value: Who really benefits?

The impending system change in residential property taxation is causing heated debates among business representatives. Many business associations, especially from French-speaking Switzerland, are against the planned changes, which are due to be voted on on July 12, 2025. The resistance is particularly strong as it raises concerns about orders and the energy transition. The core of this is the abolition of the imputed rental value, which means that fictitious rental income will no longer be taxed. However, there are proposed changes to deductions that raise significant concerns.

The planned new system would mean that debt interest and maintenance deductions could no longer be claimed. In addition, deductions for climate-friendly investments will no longer apply, which is a worrying development for many critics. Christoph Schaer, director of Suissetec, confirmed the formation of an alliance of business associations and civil politicians who are committed to saying no to the reform. The alliance, which calls itself the “Commercial Alliance for Restructuring Stop-No,” is launching its campaign in August. It draws attention to the potential negative impact that a loss of deductions could have on important investments in the building stock.

Economic Impacts and Political Responses

The financial consequences of the system change are estimated at around 1.7 billion francs. This is causing concern in both business and politics. The Swiss trade association, headed by Urs Furrer, argues that owners would benefit from the abolition of the imputed rental value. However, there are doubts in French-speaking Switzerland as to whether the owners will actually use the money saved for renovations. A significant part of the population appears to be aware of the risks associated with the project.

Some homeowners' associations in French-speaking Switzerland even recommend not adopting a slogan, while another association is in favor of a clear no. Resistance comes not only from business, but also from the left and the cantons, which further polarizes the political landscape.

Link to property tax

The vote on the property tax on second properties is closely linked to the planned system change. A no to the property tax could also mean the end of the reform plans. This connection creates further uncertainty and increases discussions within the population. In principle, the Federal Council is open to reforming home ownership taxation, but only if it is balanced and affordable.

Policymakers are aware that imputed rental value taxation has been controversial for years, particularly among homeowners. After a long discussion and several rounds in the councils, a decision must now be made as to how the reform will actually be implemented. The clear rejection of various associations suggests that a deeper examination of the concerns of the population and the economy is necessary.

The federal resolution on the levying of a special property tax, which is also up for vote, was approved by both chambers with a majority of yes votes. However, this constitutional provision is subject to mandatory referendum, which means that a double majority is required for adoption. The outcome of the votes is therefore eagerly awaited.

In summary, a complex picture emerges in Switzerland, where both economic and social factors play a decisive role in future residential property taxation. Whether the reform will ultimately be adopted remains uncertain until the vote in September 2025.

Further information about the background can be found at SRF and ESTV.