Impacts on Home Values
In the realm of real estate, Switzerland is about to witness a significant change with the upcoming vote on the property tax reform in September. Here's a breakdown of the key points you should know.
The latest issue of the Observer's magazine, along with a series of helpful guide articles for daily life, is now available for free subscribers. Delivered straight to your mailbox every Wednesday and Sunday, these insights offer valuable perspectives on various aspects of life.
One such insight is the article "Finally understandable: The best arguments for or against the self-rental value," first published in "Cash" on 29.8.2025. This piece delves into the debate surrounding the reform of the imputed rent, a topic that has been generating much discussion recently.
The reform, if passed, is expected to give the real estate market additional momentum, especially with continuing low mortgage rates. However, it's important to note that the system with the self-rental value is unsuitable, according to Matthias Pflume, Head of Extras & Consulting Text Chief.
The reform is designed to address the imputed rental value tax, a key factor influencing the attractiveness and profitability of owning old residential buildings. The expectation is that prices for these properties may decrease due to the abolition of maintenance deductions, potentially leading to regional stagnation or even a decrease in prices.
The calculation of the reform's effect on different household types took into account the imputed rent, maintenance deduction, and interest rates on loans. Specific sections were dedicated to Seniorenhaushalt, Familienhaushalt, and Restliche Haushalte, with 81'000, 115'000, and 3'000 words respectively. The Seniorenhaushalt and Familienhaushalt sections each have 400 and 500 words less than their respective totals.
It's worth noting that over the past two decades, around 70,000 people have migrated to Switzerland's permanent population each year on average. However, the future of immigration remains uncertain. Immigration and mortgage rates are key factors for the real estate market, with significantly higher interest rates likely to constrain demand.
A constitutional amendment is required for the reform, and the latest polls suggest a 'yes' to the reform, with around 60% supporting it, about a third rejecting the proposal, and the rest undecided. The vote on September 28 will decide the fate of the entire reform, including the abolition of the imputed rent and the reduction of deductions, as well as the allowance for cantons to levy a special tax on second homes.
While the reform may not lead to a significant additional boost in house prices, it's expected that homeowners, on average, will benefit from the reform, as the imputed rent is often higher than the loan interest and the flat-rate maintenance deduction.
Support for the reform is high among the bourgeois, while the political left is resisting the project. New construction is likely to become more expensive due to the tax relief partly flowing into more expensive objects.
In conclusion, the upcoming property tax reform in Switzerland promises to bring about significant changes in the real estate market. As we approach the vote in September, it's crucial to stay informed and understand the potential implications for different household types.
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