wow, I bow before thee 
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The apartment complex was constructed in 1993 and has not been renovated since. That could explain the low taxable value.
My place is much older but the taxable value (in percentage) much higher. Maybe is a cantonal difference?
Probably.
I experienced once that the tax value was revised after I purchased an appartement, increasing from the previous lower value to about 80% of my purchasing price.
I heard (but cannot confirm) that it is the standard practice in this canton (VD); this is beneficial for the canton when real estate prices generally increaseâŠ
For most cantons, purchase price or market value are irrelevant in the deemed rental income determination.
Instead, insurance value or specific forms are used. Each canton has its own method.
SFTA published an interesting recap on the topic in FR, DE and IT.
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Nationalrat: Eigenmietwert soll abgeschafft werden
Haus- und Wohnungsbesitzer sollen kĂŒnftig bei der SteuererklĂ€rung auch bei Zweitwohnungen den Eigenmietwert nicht mehr angeben mĂŒssen. Der Nationalrat will einen kompletten Systemwechsel bei den Wohneigentumssteuern â anders als der StĂ€nderat.
How long could it take to change the home ownership taxes?
Trust me, its not gonna happen. In the contrary - there were a few press articles that low tax cantons play the system by systematically underestimating house values. All cantons do this to a certain extent, but I read a few very extreme cases in Zug. I think that the imputed rent will remain and I was not surprised if it will be enforced better.
Why? On one hand, taxation of imputed rent makes sense and is fair. Without taxing imputed rent, there was a tax incentive to home ownership and we therefore had a market distortion. Beyond this, removal of disputed rent tax would further reduce tax justice. Systemically, it was the wrong thing to do.
In addition to this, we are in a time where the majority of people face an economically scary outlook as rents heavily increase and property ownership was even more out of reach than it was 2 years ago. In such situation, there is zero chance that anything that could be seen as a favor to landlords would ever pass a public vote. Therefore, the parliament will do a beauty contest and they try to position themselves for the upcoming general elections - but no-one will dare to actually put a new law in place as it would be hammered in the certain referendum.
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I think it would help to call it âhome ownership taxâ or something like that. Imputed rent is something of a strange concept to grasp, for foreigners anyway.
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The most transparent way was when the Tax Authorities determined a Market Rent that you, as a renter had to pay to yourself as a landlord. That you then were forced to do this payment-transaction from your bank account to your bank account. And that you then had to declare the rental income you received (from yourself) as additional money.
Oh hang on - we could just skip the âsend money from your bank account to your bank accountâ step, and we could now call it âimputed rentâ. Tadaa - there we are.
MANY countries actually do the same, but just in a less transparent way. Switzerland is one of the very few countries that imposes a wealth tax on mobile assets. Most countries however impose a wealth tax on Real Estate. The objective is exactly the same than with the imputed rent. The only thing is that there, people (in my view with reason) argue they had to pay wealth tax on real estate - whereas there was no real estate on other assets.
Conclusion - its a strange concept but probably still significantly better than what most other countries doâŠ
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I wouldnât be surprised if a removal would get a yes at the voting ballot. After the US, Swiss people are the #2 world champions in being temporarily embarrassed millionaires. Remember how 71% of the population was against a federal inheritance tax at >2 mio CHF even though only 2.7% of the population has >2 mio CHF taxable wealth? Yeah.
Yes landlords have a bad rep, but âit might negatively affect me in this hypothetical scenario in my head later in lifeâ is a damn strong incentive in this country, not to mention the millions of CHF that the SVP, FDP and HEV could throw into campaign funding.
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I agree that it could have a chance to pass: home ownership is on the (slow) rise and those people would be highly motivated to vote.
I would like to add that I was surprised how openly right-leaning HEV is and how it shamelessly instructs me how to vote for this or that referendum (I canât anyway, yet).
Article summarising the current situation: Houzy Magazine | Government Wants to Abolish Imputed Rental Value: When Two Argue ...
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âThe system change would disadvantage buyers of old properties because they would no longer be able to deduct the costs of renovations or refurbishments from their taxable income, or only partially. Moreover, more and more construction experts assume that fewer homeowners would invest in property maintenance as soon as the financial incentive of tax deductions is removed. This could widen the price spread between new and old buildings.â
This is quite a big impact. Might lead to much lower prices for old houses. Not only that, people would be inclined to do renovations with black labor.
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It may disadvantage new owners as well with todayâs interest rate when the interest paid > deemed rental income and the debt is still high.
It depends a lot how deemed rental income are determined by the canton.
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Itâs a Baselland thing. Quite useful for offsetting some of the huge wealth taxes.
I think the imputed rental tax is good as it makes home ownership and rental tax neutral.
The problem is that it is hard to explain/justify to people.
I also donât think it is a good idea to remove interest rate deductions for mortgages. At the moment you can deduct interest, Iâm not sure it is wise to create a special category of interest just to offset scrapping the tax. Then youâre just doubling-up on bad policy.
There will be time before any changes come in. If it does, I will accelerate all renovation works to take advantage of the deductions while still possible.
I suspect the loss of interest deductibility will not be a big deal. Iâm sure there will be creative products to provide loans not secured on housing which can be be used to pay off the mortgages.
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Hello all,
I heard recently that there is going to be the abolition of rental value for both main and secondary dwellings, the limitation of the deductibility of passive interest and the abolition of the deduction of maintenance costs => Le Conseil national accepte la suppression de la valeur locative - rts.ch - Suisse
Iâm wondering how much this changes the tax optimisation, rent vs buy, etc.
Who can help me to investigate these questions?
Many thanks,
Lev
As long as itâs not voted and integrated by your canton there is no value to do the simulation.
If you have the cash, you will be able to limit your interest rate by reducing the amount borrowed.
Each year you will save the annual interest of your loan.
Interest may become cheaper if you switch to fix duration target than an infinite loan.
You will be able to do simulation when the tax software will be updated but for now itâs pure speculation. You can Buy your home and change your mortgage later.
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