If the imputed rental income disappears, would it make it a no brainer to own your home?
(Assuming you are staying in the same place for 5 years+)
Well, a no brainer maybe for the ones who can afford the downpayment and the mortgage.
I think the left would fight it as it would basically be a gift to people who already own a house. By increasing demand and therefore also prices I guess it would not make buying that much more affordable.
As the article states: “those who rent a house or apartment in Switzerland, who make up the majority of residents, will not benefit from the policy at all and may see their taxes rise to help cover the cost.” So I think a referendum would have good chances.
In case of a referendum it would be difficult to argue why we tax dividends but should not tax imputed rental value.
So I wouldn’t bet on imputed rental value tax to go away.
(As far as I understand, we don’t discuss politics (but policy) in this forum anymore. I hope my post does not qualify as politics.)
One question is whether the interest would still be deductible. Afaiu keeping the deduction is a part of the project, but for reference in most countries you either have imputed rent and deductible interests, or none of that.
Would make it easier for a referendum to go through to have either a) all the current deductions (interest and maintenance) but also imputed rent or b) none of that at all.
We live in a high tax canton and the tax savings due to maintenance / refurbishment were huge. Resulted in a discount of about 15% on the overall refurb costs.
Tax wise, it’s nice to buy deteriotated property
Home owner are a minority in swiss population. Sure. But I wouldnt be surprised if the are close to the majority from the people going to vote. Especially if Eigenmietwert are the stakes.
I have my doubts that the tax is what prevents the majority of people from owning property.
(In ZH) Availability and prices are more of a driving factor in discouraging people, IMHO. Especially when considering the big rush that came in the past years with low interest rates, etc.
Should this pass however, we may see further increase in demand on an already oversaturated market, I’d be curious to understand whether the current and future/planned supply of housing can meet demand… anyone would know where to look for data?
Nowadays with the really low interest rates agree, but if they go to 3%-5% then its the difference between pay less in a monthly basis or more.
True to some extent, but I would still argue that mortgage costs (driven by the rates) and property cost (driven by speculation, under-supply or over-demand, e.g. of single units) are going to play a much bigger role than taxation.
i.e. before even thinking about ongoing cost of ownership you need the capital and the affordability to fit.
I would be interested to see the data where the conclusion was drawn that taxation is one of the main drivers to prevent home ownership, not that I don’t believe them, it just doesn’t match with my limited anecdotal experience and I’m keen to understand better.
I share your opinion.
Pragmatically speaking, I’ve seen Eigenmietwert values from 10k (> 100m2 flats in the suburbs) to 50k (premium house in the suburbs or centrally located nice flat) in Zurich area.
Usually mortgage (if any…) and (deductible) charges are at least offsetting the Eigenmietwert in the tax declaration.
So if primary residence owners can still make these deductions while abolishing the Eigenmietwert, it means ca. 3 to 15k tax savings per year
Exactly, this means something like 1.2k a month that you need to add to your calculations of the mortgage and maintenance,… to see if it is worth rent or buy.
In our case: 24k Eigenmietwert, 9k interest, 4k Pauaschalabzug for maintenance = taxable income increased by 11k
Well then you belong to the few exceptions I know
Nevertheless congrats for your low charges; if your property is a condo you can increase your Erneuerungsfonds to deduct more (if making sense)
Or you can renovate your property every year a bit (again, if making sense)
May I ask you which kind of property is having such a low amount of charges?
We deduct the effective maintenance cost for about 4 years as we did a major refurbishment over this time. During these years, there’s a significant tax benefit.
Once the refurbishment is completed, I will onlx be able to deduct a “flat charge” (Pauschale) of 4k as I assume the effective cost will be lower than 4k. This will result in a tax disadvantage.
It’s a semi-detached house.
The main reason that prevent people to buy are the crazy high prices and very few offers available on the market. So anything that make buying more attractive will just report on housing prices and money form the taxes will just move to seller pockets.
The only thing to do to release some pressure is to open much more land for construction. Everything else will not change much.
Ya simple solutions for complex problems have always worked… or not.
If you open more land for construction, you will just have more urban sprawl, resulting in higher costs for infrastructure per person, more need for individual car etc.
Solution would be more into better urban planning, making cities better places to live while increasing density of population, reducing space requirement by head (without feeling opressed of course).
one more bucket of oil onto the already hot RE prices - what could possibly go wrong?!