In brief
- Until 2028 (at the earliest), owners of second homes must declare rental value as taxable income.
- The rental value will be abolished in 2028, but tax deductions will be drastically limited.
- The cantons will be able to introduce a special property tax on second homes.
- Swiss municipalities may not exceed 20% of second homes on their territory.
- At the time of sale, a tax is applied to the profit earned.
What is a second home in Switzerland?
A second home is clearly distinct from the main residence. It is a property used occasionally, generally for vacations or leisure, and located in a different place (canton or country) from your primary residence.
Secondary residence vs. secondary home
It is essential to understand this important distinction. A second home is a property used occasionally for vacation and relaxation, with no connection to professional activity. In contrast, a secondary residence is linked to a professional activity and used by people residing there during the week.
This distinction has important legal implications, as second homes are subject to the Federal LRS Law (Law on Secondary Residences), unlike primary residences. The law defines a primary residence as any property occupied for a long period, whereas a second home includes any property that does not fall into this category.
Legal restrictions on second homes in Switzerland
Swiss municipalities must adhere to a strict quota of maximum 20% of second homes within their territory. This rule aims to preserve the balance between tourist accommodations and housing for permanent residents, while maintaining social cohesion in the affected areas. Cantons remain free to enforce stricter rules if they wish and may authorize properties intended for qualified tourist accommodation.
Specifics on Second Homes Located Abroad
If you own a vacation home abroad or a second residence in another country, the property in question and any income it generates will be taxed in that country. However, you must still declare this property in Switzerland as well, even if you do not pay any federal, cantonal, or municipal tax on it.
However, its value and the income it generates affect the tax rate: the fiscal value influences the level of the wealth tax, and the income (rental income and imputed rental value minus deductible maintenance costs and mortgage interest) affects the level of the income tax rate.
Second-home tax: current system
Rental value: fundamental principle
Until the reform is implemented, owners of second homes are subject to the rental value system. This tax mechanism treats the theoretical rent you could receive if you rented out your property as taxable income. It is a notional income that must be declared to the Confederation, cantons, and municipalities.
Each canton applies its own calculation rules, taking into account the property’s location, living area, year of construction, and local market rental prices. In practice, the rental value generally represents between 60% and 70% of the estimated market rent. This amount must be declared in your tax return, even if you use your residence only a few weeks per year, and even if weather conditions (snowfall, avalanche risks) limit the property’s use.
Associated tax deductions
The current system allows the taxation of the rental value to be offset by several deductions. You can notably deduct mortgage interest, maintenance costs of the property, renovation work, investments in energy efficiency, and measures to protect the environment. These deductions can be substantial and allow many highly indebted owners to pay less tax than the theoretical rental value would suggest.
Property tax on second homes
In addition to the rental value, owners pay an annual property tax, calculated on the gross value of the property. The rate varies between 0% and 0.3% depending on the canton. Some cantons have abolished this tax, while others enforce it strictly.
The way the fiscal value is determined also differs from canton to canton: some base it on the purchase price at the historical time of acquisition, others use the average price of the year of acquisition, and some even apply a deduction.
Declaration of assets
Your second home must be included in your tax return, where it will be recorded as an asset. No special tax benefits are granted, as a second home is considered a privilege. This declaration is in addition to the taxation of the rental value and can affect your overall tax rate.
The Reform of 28 September 2025
28 September 2025 marks a major turning point in Swiss tax history. Citizens approved the abolition of the rental value taxation by 57.7%, ending more than a century of fiscal tradition. This decision comes after four previous reform attempts, all of which failed in 1999, 2004, 2012, and during subsequent parliamentary initiatives.
The uniqueness of this fifth attempt lies in its balance: unlike previous proposals that abolished rental value taxation while retaining most tax deductions, this reform drastically limits deduction possibilities.
Pillars of the reform
The reform consists of two legally linked elements that cannot come into effect independently. On one hand, the abolition of rental value taxation ends the obligation to declare notional income for property owners, whether for primary or secondary residences. This abolition is expected to take effect no earlier than 2028.
On the other hand, a new cantonal property tax on second homes allows cantons to create a special property tax to offset the loss of tax revenue from second homes. This constitutional provision gives cantons significant freedom in implementation, thus respecting Swiss fiscal federalism. Cantons can also authorize municipalities to collect this tax, either separately or as a surcharge on an existing property tax.
Drastic reduction in tax deductions
In exchange for the abolition of rental value taxation, the reform significantly restricts deductions. The deduction for property maintenance costs is eliminated for federal, cantonal, and municipal taxes. Energy-saving measures and environmental protection investments are no longer deductible from direct federal tax.
Regarding interest expenses, the reform adopts the strictest version debated in Parliament. Owners can only deduct interest expenses if they rent out or lease their property. A notable exception applies to first-time buyers of a primary residence, who can deduct interest expenses for 10 years within a set limit, to facilitate property ownership for young adults and families.
Impact of the reform on owners of second homes
Each canton will need to decide whether to introduce this tax and under what conditions. Estimates suggest that a rate between 4.7‰ and 9.2‰ of the fiscal value would be necessary to offset revenue losses in tourist cantons. Practically, for a second home valued at CHF 1,000,000, this would represent an annual tax between CHF 4,700 and CHF 9,200, in addition to other taxes such as wealth tax and tourist tax.
This room for manoeuvre left to the cantons is in line with Swiss federalism in tax matters, and allows for tailor-made solutions adapted to local realities. Some cantons with little interest in second homes may even decide not to introduce the tax, while others that are heavily dependent on tourism-related tax revenues will probably have to do so.
Who are the winners and who are the losers?
The reform creates very different situations depending on the owners’ profiles. Owners who have repaid a large part of their mortgage, particularly retirees with low debt, will generally benefit from the reform, as they could no longer deduct much interest but still had to declare the rental value. For them, the abolition of rental value represents a significant relief.
Conversely, second-home owners in cantons that introduce the special tax could see their tax burden increase. This is especially true for those who regularly carried out deductible maintenance work and for highly indebted owners who fully benefited from interest deductions. Highly indebted young buyers will be disadvantaged, unless they are first-time buyers of a primary residence.
Alpine cantons particularly hard hit
The cantons of Valais, Graubünden, and Ticino host a significant share of Switzerland’s second homes. Estimates suggest that these tourist regions could lose around CHF 150 million in tax revenue due to the abolition of rental value taxation on second homes. To maintain their budgets, these cantons will very likely introduce the special property tax, increasing the tax burden on second-home owners in these popular areas.
The canton of Berne has a special feature: at present, only the highest rental value (that used for direct federal taxation) is applied for cantonal taxation of second homes. With the reform, this canton will also have to revise its tax system to compensate for the losses.
Tax on real estate capital gains
When selling a second home
Whether under the current system or the reform, the sale of a second home generates a real estate capital gains tax if you make a profit, meaning the sale price exceeds the purchase price of the property. This tax applies in the same way as for the sale of a primary residence and is collected by the canton where the property is located.
The crucial role of length of ownership
The length of time you have owned your second home directly affects the amount of real estate capital gains tax. The longer you hold the property, the lower the tax, thanks to a progressively decreasing scale applied in all cantons. Conversely, a quick resale not only results in a significantly higher tax but may also trigger a speculation surcharge.
This speculation surcharge aims to discourage the rapid buying and reselling of properties, thereby contributing to market stability. It can represent a very significant tax burden and turn an apparently profitable transaction into a financial loss. This is why it is essential to approach the purchase of a second home with a long-term perspective, ideally holding it for at least 10 to 15 years.
Renting your second home
Taxation of rental income
If you decide to rent out your second home during periods when you do not use it, this rental activity has significant tax implications. Rental income is subject to income tax just like your other income. Under the current system, you must pay tax on a portion of the rental value proportional to your personal use. The canton of Bern is an exception, applying only the highest rental value.
Some cantons also allow a tax deduction for wear and tear caused by renting out the second home. In any case, as with a rented primary residence, mortgage interest and certain renovation work remain deductible.
After the reform
Under the new legislation, the situation for owners who rent out their property will be noticeably different. Rental income will remain taxable as it is today, but owners will be able to deduct interest expenses, unlike owners of properties used exclusively for personal purposes. This difference in treatment could encourage more owners to rent out their second homes for tourism.
The special property tax on second homes is not expected to apply to properties regularly rented out, as it specifically targets residences used primarily for personal purposes. This distinction could create a significant tax advantage for renting and influence owner behavior.
Conclusion
The tax on second homes in Switzerland is undergoing a historic transformation with the reform adopted in September 2025. The abolition of rental value taxation significantly simplifies the Swiss tax system, ending a century-old mechanism often criticized for its complexity. However, this simplification comes with uncertainties regarding the future cantonal property tax, which could substantially alter the tax burden for second-home owners.
For current and future second-home owners, the 2025–2028 period will be critical. It will be essential to closely monitor cantonal decisions regarding the introduction and conditions of the special tax, anticipate the fiscal impact based on your personal situation considering your debt level and financial capacity, strategically plan renovation work before the reform takes effect to take advantage of the final deductions, and consult a tax expert or financial advisor to optimize your strategy in this new context.
Taxation of second homes remains a complex subject requiring a thorough understanding of federal and cantonal rules, as well as ongoing legislative developments. Differences between cantons will likely become more pronounced with the reform’s implementation, making comparison and strategic planning even more important.
Frequently asked questions
A second home is used for vacation and leisure, whereas a secondary residence is linked to professional activity. Only second homes are subject to the Federal LRS Law. This distinction is important because it determines the applicable tax regime and any potential purchase restrictions.
This will entirely depend on cantonal decisions. In cantons that introduce the special property tax, particularly highly touristic alpine cantons, the tax burden could increase despite the abolition of rental value taxation. In other, less affected cantons, owners could instead benefit from a net tax relief.
Until the reform takes effect, expected no earlier than 2028, you can continue to deduct your renovation work under the current rules. This makes it the right time to plan and carry out any major projects you were considering. After the reform comes into force, deductions for maintenance work will be eliminated for federal, cantonal, and municipal taxes.
It is still too early to give a precise answer to this question. Each canton must first decide on the introduction and rate of the special property tax. Cantons with few second homes might not introduce this tax, which would potentially make them more attractive. Conversely, popular tourist cantons will probably have to compensate for lost tax revenue.
A hasty sale is generally not recommended. First analyze your personal situation, taking into account your level of indebtedness, your ability to pay any special taxes, and the length of time you have already held the property. A quick sale would generate a high property gains tax and potentially a speculation surcharge, which could cancel out the benefits sought. You should wait to see what your canton decides about the special tax before making a final decision.
No. Funds from the 2nd pillar and 3rd pillar A are subject to strict withdrawal conditions. Therefore, it is only possible to acquire a primary residence using these funds.
