The Abolition of Imputed Rental Value

A tax turning point that changes everything: why the abolition of the imputed rental value is shaking up Swiss real estate

On September 28, 2025, Switzerland made a historic decision: the abolition of the imputed rental value was approved by a large majority of voters. (Thanks to our German-speaking friends!) This change, awaited for decades, is far more than a technical adjustment. It represents a major fiscal turning point that will redefine the rules of the game for homeowners, tenants, municipalities, and cantons.

For the canton of Vaud, which opposed this reform in the vote, the stakes are particularly high: it will need to protect public finances, adapt energy and social policies, and support property owners and investors through a transition that will have very concrete consequences on decisions about purchasing, renovating, and managing real estate.

In this comprehensive article, we will explore everything you need to know about the abolition of the imputed rental value, with a particular focus on the canton of Vaud: what it means, how it will work, what changes to expect for owners and tenants, and how to prepare for them.

What is the imputed rental value and why does its abolition change everything?

Before we go any further, let’s clarify this often misunderstood concept. The imputed rental value (Eigenmietwert in German) is a fictitious income attributed by the state to homeowners who live in their own property. It corresponds to the theoretical rent they would receive if they rented out their home.

This amount is added to the homeowner’s taxable income as if it were real income. In return, the homeowner is allowed to deduct certain expenses, including:

Mortgage interest
Maintenance costs
Energy renovation expenses

This mechanism, designed to ensure tax fairness between owners and tenants, has long been controversial. Property owners have criticized it as an unfair tax on a fictitious income, while its supporters argued that it encouraged maintenance and energy efficiency improvements in the housing stock.

The abolition of the imputed rental value puts an end to this system. In practical terms, it means:

Homeowners will no longer be taxed on a fictitious income.
Certain tax deductions will be reduced or abolished.
Cantons will be able to introduce a property tax on secondary residences to offset lost tax revenue.

However, this reform will not come into effect immediately. The federal government estimates that the legislative and regulatory transition will take time, and implementation will not happen before 2028. (So, you still have a bit of time to complete your renovations.)

A story that illustrates the stakes: Marie and Laurent in Lausanne

Marie and Laurent live in Lausanne in a house they bought more than 20 years ago. Now retired, they have almost fully repaid their mortgage. Each year, the municipality imposed an imputed rental value of around CHF 20,000, added to their taxable income, which significantly increased their tax bill.

With the abolition of the imputed rental value, this burden will disappear. On paper, their tax bill will be lighter. But things are not so simple:

Their deductions for maintenance expenses will likely be limited.
Their mortgage interest (now very low) will no longer be, or will barely be, deductible.
Their municipality could introduce a tax on secondary residences to offset the loss of revenue.

The real impact for Marie and Laurent will therefore depend on many factors. This story perfectly illustrates the heart of this reform: it simplifies the system, but its effects will vary greatly depending on individual circumstances.

Abolition of the imputed rental value – Why this reform now?

The abolition of the imputed rental value did not happen overnight. It is the result of over 20 years of political debate. Its opponents called it a “tax on non-existent income”, while its supporters stressed that it ensured fairness between owners and tenants and encouraged renovations.

Several parliamentary attempts had failed in the past. This time, the project cleared all the hurdles: constitutional amendment, new legal frameworks, and the introduction of cantonal compensation mechanisms. The 2025 popular vote confirmed this choice, marking the end of a unique tax model in Europe.

The four major practical consequences for homeowners

Here are the main changes this reform will bring:

End of imputed rental value taxation – The fictitious income will no longer be added to taxable income.
Cantonal authority to compensate – Cantons will be able to create a property tax on secondary residences.
Reduction of deductions – Mortgage interest and some maintenance costs will become partially or fully non-deductible.
Deferred implementation – The reform is expected to come into force no earlier than 2028, with a transitional phase.

Focus on Vaud: The canton faces a budgetary and political challenge

The canton of Vaud largely rejected the abolition in the vote. Several reasons explain this position:

Significant loss of tax revenue – Vaud fears a shortfall of several hundred million francs.
Risk for the energy transition – A reduction in tax incentives could slow down renovation efforts.
Local disparities – Municipalities will not all have the same capacity to offset revenue losses.

The canton of Vaud will therefore have to craft its own response: adjusting tax rates, introducing a property tax on secondary residences, or implementing new renovation incentives.

The seven practical consequences for a homeowner in Vaud facing the abolition of the imputed rental value

End of taxation on fictitious imputed rental value.
Possible reduction of mortgage interest deductions.
Limitation or removal of deductions for renovation work.
Potential introduction of a cantonal tax on secondary residences.
Uncertainty about incentives for energy-efficient renovations.
Local variations depending on the municipality.
The need to simulate one’s tax situation before making important decisions.

Example: Typical situation in Lausanne

Let’s take the example of Mr. X, the owner of an apartment, amount in CHF:

Imputed rental value: 18,000
Marginal tax rate: 20%
Deductible mortgage interest: 9,000
Deductible renovation expenses: 2,000
Tax calculation: 18,000 × 20% = 3,600

Before the reform :

Additional tax due to imputed rental value: 3,600
Total deductions: 11,000

After the reform :

Abolition of the imputed rental value: tax saving of 3,600
Limited deductions: variable impact depending on final rules
Possible tax on secondary residences: unknown at this stage

This example shows that the net gain can be significant… or very limited, depending on accompanying measures.

FAQ – Most Frequent Questions About the Abolition of the Imputed Rental Value

Q1 – When will the reform take effect?
Not before 2028, according to the legislative calendar.

Q2 – Will I pay less tax?
Not necessarily. It will depend on your debt, renovation works, and the decisions made by the canton.

Q3 – What measures can municipalities take?
They can adjust their tax rates or introduce a tax on secondary residences.

Q4 – What about energy renovations?
Tax incentives may decrease, but cantonal programs could compensate for this.

Q5 – What should I do now?
Simulate your situation, plan your renovation projects, and monitor cantonal decisions.

Impact on tenants: A risk of building deterioration not to be underestimated

Even though the abolition of the imputed rental value primarily concerns property owners, tenants could feel its indirect effects — possibly more than expected.

Fewer incentives to renovate = risk of an aging housing stock

Until now, the possibility of deducting maintenance and renovation costs encouraged owners to maintain and improve their buildings. Without this tax incentive, some may decide to postpone or even abandon certain non-essential works.

Possible consequences:

Increased deterioration of certain buildings, especially older ones.
Reduced comfort for tenants (insulation, heating, humidity).
Higher energy consumption → higher utility costs for tenants.
Limited supply of modern housing if renovations are delayed.

Potential effects on rents

Some landlords could use deferred renovations as justification for significant rent increases after works are eventually carried out. Conversely, others might avoid investing altogether, leading to more stable rents but in older, less comfortable housing.

How to avoid this negative outcome?

The risk of deterioration is not inevitable. Public authorities have powerful tools at their disposal:

Cantonal subsidies for energy renovations (subject to change).
Tax credits tied to regular maintenance.
Technical support for rental property owners.

Finally, the law imposes a minimum maintenance obligation. Tenants have the right to report serious defects or clear lack of maintenance.

Conclusion: This tax reform could transform the dynamics of property maintenance. Without accompanying measures, the risk of an aging housing stock exists — but it can be anticipated and mitigated.

Impact on the Vaud real estate market: Trends and outlook

The abolition of the imputed rental value will have various effects on the market:

Demand: More potential buyers, especially among current tenants.
Prices: Possible increase in attractive areas, especially if demand intensifies.
Rental investment: Limited impact, unless new taxes on secondary residences are introduced.
Renovation: Risk of slowdown, unless alternative incentives are implemented.

What strategies could the Vaud authorities adopt?

To support this transition, the canton could:

Introduce targeted subsidies for energy renovations.
Implement a transitional phase for tax deductions.
Create a progressive property tax on secondary residences.
Support municipalities in adjusting their tax rates.

A Question for you about the abolition of the imputed rental value

As a property owner, investor, or tenant in the canton of Vaud: What is your main concern regarding the abolition of the imputed rental value?
Reflecting on this will help you better anticipate the decisions you will need to make in the coming years:

Checklist to prepare yourself correctly

Simulate your tax situation before and after the reform.
Reassess your renovation projects.
Check whether your property could be subject to a tax on secondary residences.
Consult a tax advisor.
Monitor decisions by the canton and your municipality.
Adjust your real estate strategy accordingly.

Conclusion: A reform that changes everything… provided you’re prepared

The abolition of the imputed rental value marks a major milestone in Swiss tax history. It promises a simplified system but also opens the door to budgetary, energy, and social challenges.

For the canton of Vaud, the equation is complex: balancing public finances, encouraging renovations, protecting tenants, and supporting property owners. Everyone — individuals, investors, and authorities — will have to adapt to this new reality.

Brymmo supports you during this transition

At Brymmo, we closely follow every stage of this reform and help our clients understand its impact. Whether you are an owner, buyer, investor, or tenant, we can help you:

Simulate your tax situation with our partners,
Plan your real estate projects,
Adapt your investment strategy,
Identify the best opportunities in the Vaud market.

Contact us today at www.brymmo.ch to benefit from personalized support in this new fiscal landscape.

Source: RTS, Confederation, various

The abolition of the imputed rental value in the canton of vaud: Everything you need to know about the tax reform that will change swiss real estate