Imputed Rental Value

In Switzerland, imputed rent is a fictional rental income. It is applied to the taxable income of property owners who live in their own home.

When you own and live in a house or apartment in Switzerland, the tax office adds a markup to your taxable income. This markup is equivalent to between 60 and 70 percent of the income you would earn if you rented out the property instead of living in it, depending on which canton you live in.

In other words, imputed rental income is a portion of the income you would theoretically spend if you had to rent your home instead of owning it.

Imputed rent is meant to create tax fairness between homeowners and people who rent their homes. Renters cannot deduct the rent they pay for their homes from their taxable income. This could result in their paying higher income taxes than homeowners, who can deduct interest paid on mortgages and many maintenance costs from their taxable income. The imputed rental income added to the taxable incomes of homeowners results in homeowners paying similar income taxes to non-homeowners.

The processes used to determine imputed rental income are complex and vary between cantons. Tax offices generally first determine a property’s market rental value, and then apply a discount to this to determine the imputed rental income.

Cantons which determine imputed rental income based on individual property valuations include:

• Aargau

• Appenzell Ausserrhoden

• Bern

• Fribourg

• Geneva

• Jura

• Luzern (exceptions apply)

• Nidwalden

• Schaffhausen

• Schwyz

• Solothurn (for properties worth 240,000 francs or more)

• Thurgau

• Ticino

• Uri

• Vaud

Cantons which determine imputed rental income based on cantonal property value estimates include:

• Appenzell Innerrhoden

• Basel-Stadt (except for apartments in apartment houses owned by the homeowner)

• Basel-Landschaft

• Glarus

• Neuchâtel

• Obwalden

• Solothurn (for properties worth less than 240,000 francs)

• St. Gallen

Cantons which determine imputed rental income based on the actual rental income generated by comparable properties:

• Basel-Stadt (for apartments in apartment houses owned by the homeowner, imputed rental income is based on the rents of rented out apartments in the same building)

• Grisons

• Valais

• Zug

• Zurich (for apartments in apartment houses, imputed rental income is based on the rents of rented out apartments in the same building)

Cantons which determine imputed rental income based on land prices and the market value of buildings:

• Zurich (for single-family homes and condominiums)

Federal income tax

Imputed rent is also added to taxable income for federal income tax purposes. The minimum markup added to your taxable income is 70 percent of your property’s market rental value.

Controversy

Imputed rental income has been the topic of ongoing legal discussions, with many attempts being made to have it phased out.

More on this topic:
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Things to consider before buying property in Switzerland
How to find out how much your property is worth
Tax deductions in Switzerland which can save you money