Change in mortgage strategy once tax rules change?

Real Estate
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While still a while away, eventually the Eigenmietwert will disappear and interest tax deductions will (largely) stop as well - assuming no surprises.

I’ve started modeling the impact and for my wife and me it looks like a moderate gain coming out of this plus further stimulus to continue to casually pay down the mortgage bit by bit. We’ve made enough ‘big’ one off payments to reduce our morgage (and also did 30% downpayment to begin with when we purchased our house) AND are still on the hook to amortize further for a few more years as per our mortgage agreement. In 3-4 years we’ll wind up with only 35% LTV (and that doesn’t even assume inflation of the house price and investments we’ve made in the house).

When we started with our mortgage we were conservative: pay down much / fast to reduce risk. A severance payment also helped us. We’ve regretted it at times (because the interest rates are so low and the returns on investments so good) despite the fact that it does put us in a comfortable spot and have frequently said: no more additional non-mandatory payments to reduce the mortgage beyond what we’re contractually obliged in our mortgage agreement. Now though, with the tax rules changing, I’m glad we pushed to pay down the mortgage and will likely continue for much longer just for ease of mind after our last mandatory payment - e.g. perhaps after that annually pay down 1% (which would still leave enough income from investments to live off of while expanding further investments).

Am curious how others here are thinking about their (existing) mortgage and handling of paying it down or not in light of the tax rules changing?

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I would have rather kept EmW as the interest and EmW balance out but now we lose deduction on maintenance. Maybe I’ll do some maintenece before 2029.

I also suspect EmW will be replaced by an additional form of property tax.

I also ‘regret’ (not really) paying down mortgage. The idea was to set total payments equal to rent so we live with a budget that is the same as rental. Of course, had we put all the money into the stock market instead, we’d have been much better off.

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I think this will be the big negative impact which was my main reason to say nay during the vote. With the new situation I feel that there will only be very limited maintenance done once the new tax ruling is implied. For myself that also means doing all the stuff that I have planed within the near and mid-term future now until the new tax ruling is in favor and afterwards trying to not do maintenance as long as possible. I’m not sure if people where aware of this, I think it will have a big impact also on the construction industry, certainly for the smaller businesses. We will see. From a mortgage perspective, we will increase our mortgage now for a big garden project but afterwards will reduce with the goal of letting it stand at around 500k once we are 60y.

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For post 2029, I believe some bills will pass at cantonal level, with a similar effect than the current system, where the deductions of housing renovations will be deductible.

It is in no ones interest to have neglected houses and not encourage the transition to “green” energies such as solar panels, heat pumps etc.

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Also, there is high demand for builders and tradesmen currently trying to get projects done in time. Then all of a sudden demand will plumet and there will be many unemployed. While things might stabilise in time, the system shock would be significant. I don’t think any Canton wants to deal with thousands of unemployed electricians, plumbers, builders.

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That’s the property lobby’s argument.

It would mean that people would rather live in slums/outdated buildings rather than renovate their properties because of a lack of tax relief.

I don’t really buy it.

Future will tell.

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either extreme is unlikely but even if the average demand stays the sale, there will be increased demand for the next few years then a large drop then things might pick up.

but rather, i see people simply waiting a few more years before renovations. I certainly will. That translates to reduced average demand.

Now i’m not against the changes per se,. I don’t think home owners should have particular tax incentives over renters. But changing policies is messy. I would like to see much stronger support for efficiency improvements. E.g. my house is from 1972 and has essentially zero insolation. But it is far cheaper to crank up the heating in winter and have portable AC units in summer. I