Hello. I am in the process of buying a flat in AG, outside of the city I currently live in (rent). Before moving to the new location early in 2022, I want to refurbish the flat (1986, floor, kitchen, bathroom, paint job). If I start in 2021 with this (place of residence still unchanged), will I be able to profit from tax deductions for the work done (invoiced) in 2021 in the context of my tax filing 2021? The goal is to refurbish some things in 2021 and others in 2022+ in order to optimize tax-wise.
Yes. And as you mentioned, the date of the invoice is the determining factor.
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It does not sound like it is the case that you will move between cantons, but if so then it becomes more complicated (your salary will be taxed in canton of residence on Dec 31, the rennovation will be deductible in the canton where the property is located )
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At least in canton Bern it sometimes makes more sense to do it all in one year, because you can deduct a certain minimum amount even if you havenât spent anything.
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Many thanks for your quick responses, very helpful! I will have to do some follow-up research. My main concern was related to the place of residency (i.e. not living in the new/own flat in 2021, which is in the same canton, btw.).
could you expand on this? My plan is to buy a house in AG and renovate it while still living in canton ZG (rented appt) over a year end to be taxable in Zug. Are the renovations not deductible in this case?
Also, someone living in ZH city mentioned that if you buy a house at a cheap price because it needs renovations, the tax authorities could refuse your tax deductions for the renovation costs, because you essentially paid already less than the house would be worth in good condition. Have you guys heard/seen that before?
edit: just found some information on this: I think this is called the âDumont-Praxisâ - not sure though
The principle as I understand it and that has been applied to me is that real estate and maintenance of real estate are taxable in the canton where the real esate is located
Example
Your net salary in Zug after deductions (LPP, 3 pillar etc) 100k
Deemed rental value of property in AG 5k
Rennovation expenses (note: not capital improvements) 20k
Treatment:
Your taxable income in ZG is 100k
Your taxable income in AG is 0
Your global taxable income is 85k (=100 +5 -20)
=>You will pay tax on 100k in ZG but at the tax rate applicable to 85k. You should pay zero income tax in AG.
If AG has wealth tax you will pay wealth tax in AG based on the taxable value of the property, which may be lower than the purchase price
Above excludes interest. If you have a mortgage, or indeed any kind of loan such as margin loan on stocks, the debt and interest expense will be allocated between the 2 cantons based on the wealth in each canton (inter-cantonal allocation).
Obviously a house in need of renovations will be sold less than a freshly renovated house, so where would you draw the line on what could be deducted or not? Plus the catch in this situations is that when/if you sell the house the amounts claimed for renovation will be taxed as capital gains! (Which could potentially be even more than what you saved depending on timing of sale).
If I got I correctly letâs assume you buy a house at CHF 800K and you renovate it by putting another CHF 300k. Letâs assume that the authorities recognise CHF 200k as renovation and CHF 100k as value adding and you claim a tax deduction on the CHF 200k. When you sell (and hoping you are getting back purchase price + renovation) your capital gains would like this:
Sell price: CHF 1.1m
Purchase price: CHF 0.8m
Value added renovation: CHF 0.1m
Therefore your capital gains is CHF 200k and you will eventually be taxed on thatâŠ(potentially even more as the capital gains tax rate may be even higher than the saving of income tax) so I guess authorities would be fine for that 
In general even though I have deducted renovation costs I donât believe it makes such a big difference (unless you plan to keep forever) since you will eventually be taxed again when you sell. The only time when you wonât pay that back is if you sell at a lower price (which I guess is a worst scenario by itselfâŠ)
Indeed for rennovation it is important to distinguish between âmaintenanceâ and âvalue adding / capital improvementsâ
Repainting a room or replacing a fridge = maintenance, deductible from income tax
Building a new bathroom = value adding improvement, not deductible from income tax but deductible from capital gains when selling
Great comments! Sticking with the AG example, tax deductions are regulated in detail, see the following document: https://www.ag.ch/media/kanton_aargau/dfr/dokumente_3/steuern/natuerliche_personen/merkblaetter_np/2020-07-01_MB_LUK_.pdf
Resurrecting this thread, as Iâve actually bought the house discussed in 2021 and renovations started yesterday, a mere 3 years later 
Thanks @Barto for your explanation.
Iâm looking at roughly 550k renovation costs split more or less evenly across 2024/2025. Iâve roughly broken down our renovation costs into âmaintenanceâ and âvalue addingâ according to the latest guideline from canton of AG. When only accounting for items counting as âmaintenanceâ, my guesstimate is deductions of around 160k in 2024 and 215k in 2025, some of that even counting as category E/R (investments into energy savings).
Now, our taxable income in Zug last year was around 110k cantonal / 146k federal (Zug grants big deductions for renters and parents). Deemed rental value (Eigenmietwert) is about 14k.
Given your logic @Barto, that means taxable income of -40k (=110 +14 -160), so I would pay no income tax in Zug in 2024, and probably also no income tax in 2025 in AG?
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I donât think you can reduce maintenance costs from your salary.
You can only deduct costs from income that is coming from the house itself (I.e deemed rental income )
For example if your deemed rental income is 20,000 CHF, thatâs your max I think. But perhaps if maintenance costs are higher than rental income then the overall tax rate on total income might be reduced
Another point to check would be how the tax authorities treat any deductions that were made in prior years on account of âmaintenance â
Last point -: I really recommend to check with tax office what they consider as maintenance and if they agree with your assessment because 400K CHF of maintenance over two years is a lot of money.
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why not, I thought thatâs the normal practice? do you have a source for this statement
itâs the first year we own the house, no history know to me. why is that relevant?
Yeah it will be reviewed, but the linked guideline is quite explicit (with some room for interpretation, of course), but 400k is pretty normal these these if you do a full renovation (we are talking windows, heat pump, new plumbing, electrical, flooring, kitchen, baths, âŠ). Construction is expensive!
As far as I know, thatâs not correct. At least for self-use, you can deduct up to your income, not up to your imputed rent.
Maybe not what Abs_max had in mind, but if previous owners didnât do proper maintenance for years, you might be able to stretch your cost over more years. Does it look âneglectedâ?
You might be able to stretch those out, as well. At least in a neighboring Kanton, this reads:
Havenât checked this further yet for myself. If you have (or will), do you mind sharing your conclusion here?
Last possibility is of course to postpone some renovations. But I could understand you want to have constant construction in your home or move in later.
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If itâs first year then itâs fine. But in certain cantons, there is a flat deduction that is allowed on account of maintenance. Itâs typically 20-30% of the income from the property.
Letâs say I buy an apartment and I keep deducting 1% of the apartment value in maintenance cost for 10 years. And then after 10 years I actually do maintenance, I would think that tax office would like to reconcile.
In your case itâs not relevant . Somehow I understood that you own the place for three years already.
Actually I donât have a source. That was just my interpretation of the rule.
However as others have pointed, it seems my interpretation was wrong
Nope. You can switch between flat-rate (e.g. 10-20% of imputed rent) and effective cost. Year-by-year. Even differently for local and federal tax, if thereâs a benefit to it.
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Thanks all for the inputs.
thanks, thatâs reassuring and in line with what I read so far. So is the general approach / thinking correct, that I should be able to deduct more than my actual income and therefore pay probably no income tax for the next two years, even with the constallation that the property is located in a different canton than my primary residence for the first year? Should I consult a tax professional?
there were almost no renovations on the property in the last 40 years (apart new oil heater in 2004), it has all the original windows, original carpets, mostly broken kitchen appliances, etc. Itâs not un-livable, just a lot of old stuff which has just worked for 40 years but is clearly due for replacement. No one could argue this is not justified or unnecessary.
Iâll definetely try this. New heat-pump, some insulation and windows will most likely (at least partially) qualify for deferred deductions. Happy to share the process once itâs all set and done.
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Not sure about the right wording. I understand you could get your income to 0, but not below and get a tax credit. Then, under some circumstances, you can carry-forward the âlossâ below 0. Guess that differs from deferring cost to, for example, keep a minimum income of 50k or 100k due to the progression.
This neglect thing sounds to me more like if itâs close to a ruin, not replacing things at the end of their life. But there could be room for interpretation.
I canât comment about moving cantons, especially towards the discussions above (income in Canton A, renovations in Canton B). This could change the calculation quite a bit.
Likely you can find answers here, online or in the fine-print of the regulations yourself if you specify the search on these individual topics. Or find a professional. Difficult to judge whether sheâd be worth the money, but might well be worth a try to at least reach out if we talk about several 100k in deductions, i.e. several 10k in taxes.
This is not correct.