I think there is no difference between imputed rent and forced market rent . In the end it serves the same purpose
Imputed rent is in fact based on market rent with a lag. This would be changed on periodic basis
Transfer pricing is a good example. There is a big risk that the used prices are completely different to market prices or to what market prices would be if the market would be open. Forced prices are not market prices, market prices are set by the market, not by the taxman or a politician.
But that is a bit off topic.
1 Like
So the deadline for a referendum is tomorrow, I haven’t really heard anything was there any organization trying to get signatures?
There is a change in the constitution necessary which not only needs be voted but also needs a Ständemehr IIRC
2 Likes
Ah yeah, missed that it was linked to Fedlex
Still, as an investor I don’t understand the new laws. Why the hell only interest on debt to real-estate investment for rent can be deducted? It makes no sense. Either all interest on tax income producing debt or none should be allowed to be deducted!
I will vote NO, as I invest in stocks on credit. I do own real estate and I don’t care if they would just do an addition of the non tax income producing value and the value that produces it and then allow deductions of interest in the same ratio. It would make everything more complicated as it already is, but at least it would be fair.
I don’t like the actual system. A car enthusiast can deduct interest on debt for his car without producing taxed income, everybody can. Unless they come up with a better solution I will vote no. One bullshit tax is replaced by another bullshit tax!
3 Likes
Real estate investment are always treated differently versus other investments/debts. Isn’t it why real estate debt is called mortgage while other stuff is called credit, loan , debt , whatever
For RE, one can get 5X leverage and 2nd pillar support. It’s all to support people buying homes.
2 Likes
At the moment any kind of debt is treated the same way. It would not make any sense to do otherwise. Debt is debt, no matter what the collateral is.
In the actual system all debt can be deducted, in the new system only debt in ratio of value of rented out property compared to self occupied property can be deducted. But in both systems there is no difference if it is mortgage, margin loan or your mother-in-laws step sister that gave you the money.
3 Likes
The ratio is of rented out properties divided by total wealth.
AFAIK the goal is to heavily reduce leverage (it’s one of the systemic risks in Switzerland with a very high household debt).
There’s still some deduction possible for first time owners, but with a decaying deduction (max 10k for couples, dropping by 1k every year so that at year 10 no deduction is possible, half of that for singles).
Exactly. And instead of rented out properties it should be taxable income generating properties. Real estate is treated different for no reason. Wonder how REIT are treated…
And we are getting closer to the vote. Unfortunately I will not be able to vote, checked all options. I will be out of country for a few months, checked all possibilities and there is none without changing the residence.
I own real estate with kind of low debt, but I use debt too in my investment strategies. Using the calculator here: https://www.123-pensionierung.ch/berechnen/abschaffung-eigenmietwert/
I would pay about CHF 2’000 more if the tax revision goes through.
The final text I think can be downloaded here (PDF): https://www.hev-winterthur.ch/wp-content/uploads/2025/05/bundesgesetz-wohnungsbesteuerung.pdf
Yes, those … politicians did it: they made it about debt, not about real estate. You cannot deduct debt for your Ferrari anymore, that is OK. But why the hell is the only exception to “not allowed to deduct debt interest” for rented out property? It would have been much easier to say “goods that produce taxable income”, like dividend stocks. My stocks are worth more than my real estate, so I should be able to deduct more than half of the debt interest!
Now, most of the population does not profit from the new tax regime. So a vote would in theory be a clear “no”.
But unfortunately the group that has the highest proportion of voters is the group that profits most.
It is always the same with tax: no tax is fair, it should therefor at least be simple! But our politicians are influenced too much by lobbies and actually did a good job to make the tax even more complicate! I hate it. Many times doing nothing would be better than all the nonsense our politicians do!
1 Like
+1 This is just a way of increasing taxes on people and at the same time let companies get fatter, companies are not going to be touched by this and can continue to deduct debts
1 Like
I think that’s the reason for letting mortgage on properties being rented out be deductible. It avoids having all the landlords create holding companies which would be fairly disruptive.
Investment with leverage is already not considered typical wealth management, if you want to deduct it, it can be wrapped in a company right? (but there’s other tradeoffs)
Exactly. As everybody needs a roof over his head the income is fictive, but real. Now dividend income after deducting debt interest is real. But if you include debt interest there it is fictive too. So we exchange one fictive income that is real to another that is completely fictive.
I probably would have to change my calculations after I got back the last withholding tax. There the debt interest is deducted too, so I suppose that won’t happen when the tax regime changes and my CHF 2000 that i pay more will transform to a tax saving.
All way too complicate. And it is not getting easier.
What are the changes that make it more complicated or bad, besides that now your calculator shows a negative result? In January, you called it a “stupid tax”. How can it even be negative at current interest rates? The lower the mortgage, the more positive the benefit should be.
Main political argument against the reform was that it would lead to lower taxes, overall and only benefit “the rich”, aka home owners. Plus, recently some industry lobby groups that are afraid of less business if the renovations they offer aren’t deductible, anymore.
But in this case, it shouldn’t be about the majority of the population, but whether this kind of tax (and deductions that come with it) make any sense.
Not accounting for maintenance deduction beyond 20% flat rate, break-even interest rate would be some 2.5 to 3% at 80% mortgage? Even more with higher LTV.
If the imputed rent is based on an out-dated (too low) value, that’s just another problem of coming up with the fictitious value and keeping it up to date.
1 Like
The debt is counted in total. In my case it is weighted between my stocks and my real estate. Then it is somehow deducted from the money I get back for my withholding tax on dividends. It is already now way too complicate for me. It is a stupid and complicated tax that will be replaced by a even more stupid and more complicated tax… the tax on dividends earned with debt.
I don’t understand why people who rent out houses still can deduct their debt interest but stockholders can not.
I made the calculation: it is true, if I cannot deduct the debt on stocks any longer I get back around CHF 600 more than now for withholding tax. But I have to pay 2’000 more because I cannot deduct the debt interest I pay for the debt on my stocks any longer. This was with last years real estate valuation, they will change this year in Kt. Zurich, that moves toward better results for the new regime.
I have debt in different currencies, it is my hedge against inflation. I probably will never pay it back, money has a state guarantee to lose value.
My main problem is that debt interest should be deductible on all taxed income generating values, not only rented out real estate.
Seems that people who rent out real estate have a very big lobby, which is just another word for bribery!
And yes, I agree: the new tax regime favors rich people. Somehow this tax money has to be replaced. For me the difference is not very big and as I said, I will vote with the majority this time: I will not vote. (Just because I cannot vote for being out of country…).
BTW: my USD interest rate is at 5.455%. Still good business as the Dollar (and therefor my debt) loses in value.
1 Like
But that’s already the case today, isn’t it? You’ll find examples in the forum where WTH weren’t refunded due to exactly that calculation of the max refundable amount.
Is that actually in the proposal? It’s about home ownership. Would it explicitly apply to other private debt?
I understand expenses for rented real estate remain deductible, they do bring real taxable income.
In the same logic, that should apply to any other business or investments on margin, as well.
Yeah it’s called restricted proportional method, it looks at ratio of rented out properties vs. total wealth when deducting interests from debt.
My understanding is that with total wealth 10M, rented out property value 2M, can deduct 20% (2/10) of the interests. If you don’t rent out property, no deduction.
(also there’s an amount and time limited deduction for the first property you own)
1 Like
Yes, that is the situation today. The refund would be bigger with the new regime.
Yes it is, that is why I linked the actual version that we will vote on. Check 33/1.
It states that you can deduct only interest on rented real estate in Switzerland. It should be any tax-income generating asset in relation to non tax-income generating assets.
2 Likes
Where are the banks lobbying against this?
I’m curious as to whether this will pass.
While imputed rental is often confusing to some people and dis-liked, I think it is quite a ‘fair’ tax.