I don’t understand tax here at all.
We own our own apartment, with mortgage. Would we lose out if Eigenmietwert is abolished?
- What is your Eigenmietwert?
- What is your annual mortgage interest
- What is your annual maintenance spend (proper maintenance not bills)
Very roughly, if 1-2-3 is positive you win. If negative you loose. With current interest rates I expect you win unless you have an absulute money pit of an apartment.
Not just mortgage interest, but any interest at all assuming you have no rental properties.
I guess I’m the slow one around here.
It has been mentioned that…
- Without imputed rental income, people will invest less and buildings will decay.
- An efficient use of capital is to demolish the old and build new instead. Renovation work is too expensive.
- Demolish + build new is already happening, even tenants are getting evicted.
All this means there’s enough capital or access to capital out there (unrelated to tax deductions) ready to be used in keeping buildings on top condition. Even if it means demolish + build new. So, no need for tax deductions for renovation work.
I have always tried to find ways of offsetting Eigenmietwert with such things as replacing a dishwasher, fridge, steamer, heat pump, adding solar panels, painting the house, paying a gardener and more.
All replaced items were at least 10 years old and faulty in some way. The tax authorities have never questioned any deduction. The question now is would I and all other property owners be so quick to spend with the loss of a 30% (or whatever our marginal tax rate is) discount off such outgoings?
It makes repairs and maintenance more expensive. But a lot is non-discretionary. If your dishwasher breaks, are you simply going to live without one?
For me, what it might do is shift the calculus on whether I pay someone to do it, or do it myself. Previously you could deduct the labor cost for taxes. Now it is equally non-deductible as if you do it yourself.
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Don’t know about your canton but here there is anyway a pauschal deduction of 20% which for me is nearly 4K. Most years I don’t make that, the practical effect is only when I have something major like solar I try to bundle in a bunch of other thinks that same year.
Ultimately all that stuff needs doing anyway and gets done, I suspect most Swiss will be the same. The deduction is simply a compensation for an unfair piece of taxation.
I suppose this pauschal deduction will also disappear with the law change?
Why? It’s a cantonal matter, not federal.
Isn’t the plan to scrap Eigenmietwert and along with that all deductions for interest and maintenance/repairs?
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Yes, but there’s a gently ramp off for first-time property owners.
It is clear that if someone can’t deduct anymore the interest from the loan, there’s a hazard to send people straight into financial distress or even bankruptcy. Found this in English:
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Well if the eigenmietwert is nil I guess a 20% pauschal of nil is also nil. Although as it is for maintenance it will of course disappear.
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From what i have read so far, for me it makes sense to abolish ‘fantasy rent income’ for people who live in their homes, i think it is only people with falling apart houses and horrendous mortgages were benefiting (even though doubtful choice to have such property in a first place, and i think benefit was small anyway). How i see it, for people who rent out properties little will change, and for homeowners this will be a relief.
Not entirely true. We have a modern 2001 home, but last year we replaced the heat pump (ca:45K) and this year solar with batter (also ca.45K). These will be deductible.Not sure what we could do in 2026 yet.
and what is imputed rental value of your modern home?
Can one deduct more that the Eigenmietwert? Doesn’t seem logical!
Yes. If your interest and maintenance are higher then you get a net deduction
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Sure even with rental properties, I had years where costs exceeded rent and generated losses.
If the reform passes, it will disappear for cantonal and communal taxes too. No deductions for repairs, no deductions for mortgage interest.
Interest from any debt remains deductible from taxable income.