There is. It’s called not paying interest.
There should also be an incentive that limited housing stock is maximally utilized.
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Agree
One of the other issue being the wealth tax. Once debt free, you’re tax in full on the value of the property. Few thousands CHF of wealth tax only for the property every year adds up over time.
Let’s not forget that, depending on the canton, the oldest owners have a tax value on their property that is completely disconnected from reality. Some have not been updated for decades.
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To be fair, if you weren’t debt free, you would presumably have other assets you’d have invested the debt in that would increase your wealth and be taxed as such.
Unless you’ve spent it all instead of building wealth with it, in which case, yes, wealth tax is an incentive toward consumption.
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- The imputed rental tax was already a very good deal for homeowners. The imputed rent value in most cases is already far lower than market rent. The removal of this will create an unfair advantage to owner occupiers.
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What unfair advantage? If I own something, I should be able to profit from it, right? Isn’t it the whole point of capitalism?
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I am so sorry you were misinformed. Switzerland is not a capitalistic country.
What made you think it is?
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You can profit from it, but there’s some constitutional guarantees (especially if you take into account that housing is a basic need, not a luxury): Fedlex
As an alternative some cantons allow deducting your rent (with a cap), that might make sense to keep equal treatment.
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@Your_Full_Name last time I checked, it was called Federation, not People’s Republic of Switzerland.
@nabalzbhf Help and redistribution, sure, I totally support it. But not equalization. If I do more hours in a more complicated job than somebody else, I am still coming ahead of someone else who does less. If I own the place I live I am in a better place than someone who doesn’t, even after punitive and supportive measures.
Fortunately, the balance between two points of view is decided by public vote.
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Thanks, teacher.
Someone renting can’t deduct rent from taxes.
But an owner occupier can live tax free and the hidden self-rent (currently taxable at under market value) would become non-taxable.
Someone owning the same house but renting it to a third party has to pay tax on the full rent.
I guess making it a purely consumption good also makes sense: you have no tax on self-rent, but also no interest deduction and no deductions for repairs and maintenance. So I think the proposal at least makes sense taken as a whole.
I think the current set-up is really the best of both worlds for homeowners: you get all the deductions but tax only part of the income.
In the end, I guess it comes down to policy:
- Do you want to encourage better use of housing (given the housing shortage)
- Do you want to encourage home ownership
- Do you want to discourage holding of debt
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No deduction for renovation makes sense as part of the package. No deduction for interest is a completely different topic with only tangential relevance to home ownership.
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I guess there’s two point of view, housing as an economic good and housing as enjoyment.
If it’s an economic good, it makes sense to tax it regardless of whether owner benefits from it or not (in the same way that in-kind benefits are taxed for employees, if you have a free car, or free meals, etc. from your employer they get taxed, if you own a business making widgets, I don’t think you can just get a lot of free widgets for yourself untaxed, it likely would count similar to a salary and you’d pay income tax on it).
If it’s pure enjoyment, it’s like a nice watch or whatever and taxing it would be weird (personally the fact that theres a huge market for housing rentals would make me lean towards the fact it’s an economic good), many actors buy housing just to rent it out.
So … asking for a friend.
What exactly are the political opinions voiced here that are tolerated?
I kind of see some views here from me being suggested into a … ahem, I guess, “person” of the
People’s Republic of Switzerland (hi, @Dr.PI ) to, well, benign “owner occupier” described by @PhilMongoose.
I don’t have a real issue with either of these, but I feel the tone this sets for forum participants might not be the most welcoming?
Maybe I misunderstood your messaging.
Deductions for renovations serve another purpose. Since the renter is the one footing the electricity bill, there are not many incentives for landlords to do maintenance/renovations on their for rent properties. If one wants to incentivize doing maintenance/renovations, then keeping the deductions in would make sense.
From an investment point of view, they’re seen as a requirement to maintain the value of the asset (and those that bring additional value aren’t deductible, except for those linked to energy for different purposes). They can be seen as making depreciation a tax deductible expense. It seems to me to be mostly tangential to the balancing of the removal of the imputed rental value tax.
How does Switzerland compare to other countries regarding this topic? What’s considered left wing / right wing in that matter?
Apart from Switzerland I only know a few countries where we’re closer to “I
-paid-it-I-own-it-I-benefit-from-it” which comes a lot clearer at a first sight than “I-paid-it-I-own-it-I-get-taxed-on-a-rent-I-don’t-receive-in-addition-to-wealth-tax-because-it-looks-fair-to-some-people” OR “I-paid-part-of-it-I-manage-a-debt-and-interests-and-renovation-work-so-in-the-end-my-housing-is-cheap-and-when-I-retire-I-can-sell-it-at-some-zillions-CHF-because-that-is-swiss-real-estate-that-always-goes-upside-and-has-low-interest-aka-free-money-forever-and-then-leave-to-whatever-cheaper-country-and-in-between-I-can-raise-even-more-debt-when-my-house-s-value-increases”
Not only you have to be rich, but quite financially skilled to get most of it. And I am pretty sure that a lot of people misunderstand it, even as owners, and are mostly their bank’s /choose some appropriate wording/, at risk if things go wrong.
However I did not have the feeling -maybe because of some swissness involved- until now that this was such an issue, more like part of swiss culture and in a way people understand (?) they can live with a debt and some leverage, until their death and beyond, and that’s quite already a high level of finance management; the system promotes maintenance and keeping real estate in shape which is good too. It’s unfair for those who got it wrong in the first place (debt free might not be the way to own a house in CH).
I am not skilled enough to understand if the level of debt involved is a systemic problem for the swiss economy.
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Well, I don’t think I push a particular political opinion, but rather discuss and clarify existing situation. By the way, I was wondering why you think that posting a link onto recommendations or opinion of any particular party would be against forum rules. I primary consider it as a matter of fact statement, because these recommendations are what they are.
In general, as a moderator, I am trying to be understandable more than I would as an individual.
What I don’t tolerate are:
- Personal attacks, such as: “You all are XXX here and you are just against me “.
- Degrading overall statements about certain group of people, such as “All poor people are only themselves to blame for being poor “.
- Extreme, unnuanced, and therefore non-falsifiable (hello Popper) statements such as “Taxation is theft” (if you know what I mean).
There are topics that regularly fall to these levels, that’s why we keep an eye on them and might even preventively kill a discussion. However, I don’t see anything bad in discussing relevant topics as long as discussion stays at the civilized level.
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On vote my guess is:
-
Renters for lack of a better alternative: they won’t care/ won’t vote, rich people problem, we don’t hate the rich enough to raise a hand against them.
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Renters by choice : they won’t care, won’t vote.
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Renters by choice with other debt management losing their tax benefits (hello private margin investors) : a big huge NO from 0.00001% of the population
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Owners debt free or low cost debt/low maintenance: a rush for a YES
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Owners with debt and tax optimization who just bought a house for cheap and were planning tax-free years to come with huge investments on the property: that’s a NO, but they’re also a minority.
TL;dr IMHO people will vote with their wallet only when impacted, and that won’t provide a fair result for the economy.
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Actually I remember reading that the imputed rent values will be recomputed in the coming years. Do people have an idea how much those would go up? I guess that should play a role in the upcoming decision?
This is done on a Kanton level and I think Zurich will raise this year. Probably a lot, because they did not in a long time.
Just checked, my interest due to high dollar interest 2024 was 3 times the imputed rental value. In addition to the tax advantage of course my USD debt lost value against the CHF, which is considered a tax free capital gain.
I will get a few tax brackets up next time anyhow, either because they rise the value or because they don’t let me deduct interest. Life is hard…
This made me wonder, are the proposed rule changes only at the Federal tax level, or also for Cantons i.e. will cantons also be required to scrap Eigenmietwert taxation? Or could we end up in a hybrid situation where EmW is scrapped for federal taxes, but the old system remains at the cantonal level. I hope not as this would be a nightmare with 2 different systems to administer.
It also made me wonder: what happens to those cantons with large number of 2nd homes? Presumably they lose their EmW income and will not be compensated by the other changes.