What is rental value?
The rental value represents the rent your property could generate if it were rented out. For a homeowner living in their own property, it is a notional income that the administration uses as a basis for certain taxes.
According to Federal Supreme Court case law, the rental value must represent at least 60% of the market rent. This amount is added to the homeowner’s taxable income, even though no actual rent is received.
Why does rental value exist?
The system of rental value is based on the principle of tax equality between tenants and homeowners. By living in their own property, the homeowner benefits from an economic advantage (they don’t have to pay rent), which is considered a form of in-kind income by the Swiss tax authorities.
The historic reform of September 2025
During the popular vote on 28 September 2025, Swiss voters approved the reform of the taxation of owner-occupied housing by 57.7% of the vote, with a turnout of 49.5%.
This decision marks a historic turning point in Swiss real estate taxation, putting an end to a system that had been contested for decades.
The main changes
- Abolition of rental value: Taxation of fictitious income disappears for primary and secondary residences. Owners will no longer be taxed on rent they do not receive.
- Modification of interest deduction: The deductibility of mortgage interest will be limited to cases where the owner owns rented or leased property. This measure is intended to maintain a certain fiscal balance.
- Cantonal property tax on second homes: A federal decree allows cantons to introduce a specific tax on second homes, to compensate for the loss of tax revenue.
How to calculate rental value (current system)?
The rental value is generally assessed according to three main approaches:
1. Comparative rent method (11 cantons)
The cantons of Appenzell Innerrhoden, Appenzell Outerrhoden, Glarus, Graubünden, Lucerne, St. Gallen, Schaffhausen, Schwyz, Ticino, Uri and Valais calculate rental value on the basis of actual local market rents for similar properties.
2. Computerized hedonic model (7 cantons)
3. Specific cantonal methods (8 cantons)
Cantonal specificities
Canton of Zurich
Zurich applies a standardized system based on a percentage of the taxable value:
- Single-family homes: 3.5% of taxable value
- Owner-occupied apartments: 4,25% of taxable value
- The tax value corresponds to 70% of the property's market value
Upcoming increases: Following recent court rulings, the canton is revising its directive as of 1 January 2026, which will lead to an average 48% rise in taxable wealth values, and an increase of 11% for single-family homes and 10% for condominium units.
Canton of Geneva
In Geneva, homeowners must fill out a rental value questionnaire to attach to their tax return, especially after purchasing an apartment or a house.
To calculate the rental value pro rata: if you acquired your home during the year, you must report the rental value proportionally to the number of days you occupied the property.
Formula: Declarable rental value = (Annual rental value × Number of days occupied) ÷ 365
Canton of Berne
Bern carried out a comprehensive revaluation of all real estate in 2020. The assessed values increased, with cases of doubling observed for well-located properties.
The canton applies an individual hedonic valuation procedure that takes into account the specific characteristics of each property.
Canton Aargau
Since 1 January 2025, Aargau has updated its values with a significant increase: the rental value now represents 62% of the market rent, following a decision by the Grand Council dating back to 2015.
Canton of Basel-Stadt
Basel-Stadt calculates rental value by combining the building's insurance value, age-related depreciation and land value.
Canton Zug
Zug bases its rental value on the property’s purchase price or its market value.
Canton of Basel-Landschaft
The cantonal parliament has repeatedly postponed the new calculation of the rental value, preferring to wait for its definitive abolition at the federal level. This situation follows a 2017 Federal Supreme Court ruling requiring an adjustment of the cantonal system.
Impact of the abolition of the rental value
For current owners
The abolition of the rental value represents a significant tax relief for owner-occupiers. They will no longer pay tax on this fictional income, which can amount to several thousand francs in annual savings depending on the property’s value.
For future buyers
The reform could change the attractiveness of buying property. Without the deduction of mortgage interest for primary residences, the tax advantage of carrying debt decreases. This measure aims to encourage the repayment of mortgage debt.
For the cantons
The cantons will have to offset the loss of revenue the abolition of rental values. The tax on second homes is one of the planned compensation mechanisms.
Conclusion
The rental value, long a source of controversy in Switzerland, is nearing its end after the reform was approved in September 2025. This major change in real-estate taxation marks a simplification of the system for hundreds of thousands of Swiss homeowners. It will be abolished no earlier than 2028.
If you own property or are considering buying real estate, it is recommended to consult a tax expert or a wealth management advisor to understand the exact impact of this reform on your personal situation.
Frequently asked questions
Following the approval of the reform in September 2025, the system will be abolished no earlier than 2028.
Yes, as long as the system remains in force, you can challenge the amount set by the tax authorities if you feel it does not reflect the local rental market.
All the owners who occupy their house or apartment, whether as a primary or secondary residence. If you grant a right of usufruct or free dwelling to someone, it is the beneficiary who becomes liable for the tax.
The taxable value represents the value of the property for wealth tax purposes. The rental value is the taxable notional income calculated from this value or from the market rent. For example, in Zurich, the taxable value corresponds to 70% of the market value, and the rental value represents 3.5% to 4.25% of that taxable value.
Yes, in certain cantons, if your home is uninhabitable during renovation work. The conditions vary: some cantons require you to have vacated the property, others ask for proof of external accommodation costs. The reduction is proportional to the duration (example: 2/52 for two weeks of work).
If a room becomes permanently unused (for example, after a child moves out), you can request a reduction of the rental value in 10 cantons and for federal tax. Important: the room must be completely empty, not used as storage or as a guest room. This deduction applies only to the primary residence.
You can deduct mortgage interest and maintenance costs. For maintenance costs, you have two options: a standard deduction (generally 10–20% of the rental value) or the deduction of actual expenses if you carried out major conservation work or energy-efficiency renovations.
