The Debate Around Switzerland’s “Eigenmietwert”

In Switzerland, homeowners are often surprised to learn that they must pay taxes not only on their actual income but also on something called the Eigenmietwert, or “deemed rental value.” This is a unique feature of the Swiss tax system, a relic from World War I. It was introduced as a temporary measure to stabilize state finances — and more than 100 years later, we are still paying taxes on fictitious income that homeowners never actually receive.
This is a unique feature of the Swiss tax system and has been subject of political debates and referendums for years.

What is Eigenmietwert?

The Eigenmietwert (imputed rental value) is a notional rental income assigned to homeowners, reflecting what they would earn if they rented out their property instead of living in it themselves. The concept is based on the idea that living in your own home provides an economic advantage compared to renting. To ensure fairness between homeowners and tenants, this fictitious income is added to your taxable income each year.

At the same time, homeowners can deduct mortgage interest and maintenance costs from their taxable income. With mortgage interest rates of around 2.8%, these imputed earnings and deductions generally offset one another, resulting in a near-neutral effect at the federal income tax level.

Why is There a Vote on Eigenmietwert?

For years, critics have argued that the system is outdated and unfair:

• Many homeowners are forced to pay tax on income they never actually receive.

• Retirees who have paid off their mortgages often face high Eigenmietwert taxes but can no longer benefit from mortgage interest deductions.

• Rising property values have increased deemed rental values, making the tax burden heavier.

The upcoming vote (Abstimmung) seeks to abolish the Eigenmietwert for primary residences, though details vary depending on the proposal. Some models keep the deduction for investment properties, while others phase out tax advantages for mortgage debt.

Pros of Abolishing the Eigenmietwert

1. Fairer for Retirees – Retired homeowners with little or no mortgage debt would no longer be penalized with high fictitious income taxes.

2. Less Bureaucracy – Removing the calculation of deemed rental values would simplify the tax system.
   This is one of the most debated values in tax law, which leads to extensive administrative consequences from legal disputes.

3. Encourages Debt Reduction – Without deductions for mortgage interest, homeowners may be more motivated to repay their mortgages, which strengthens financial stability.

4. More Transparency – Taxation would reflect real income and expenses, not hypothetical figures.

Cons of Abolishing the Eigenmietwert

1. Loss of Deductions – Homeowners could lose the ability to deduct mortgage interest and maintenance costs, which currently reduces taxable income.

2. Impact on Housing Quality – Without tax incentives, fewer homeowners may be motivated to properly maintain their properties.

3. Less Flexibility for Young Families – Families financing homes with high mortgages would face higher net tax burdens, since they could no longer deduct interest costs.

4. Reduced Neutrality Between Renters and Owners – Tenants might argue that abolishing the Eigenmietwert creates a tax advantage for owners, reintroducing inequality.

The Bottom Line

The Eigenmietwert debate reflects a broader tension in Swiss housing and tax policy.

Abolishing the system could benefit retirees and simplify taxation but may disadvantage young families with mortgages and reduce neutrality between renting and owning. The outcome of the vote will shape Switzerland’s housing and tax landscape for years to come.

Why We Recommend a YES Vote by September 28th

After weighing the arguments, we believe that abolishing the Eigenmietwert is the right step forward for Switzerland.

Here’s why:

1. Relief for Retirees – People who have worked hard to pay off their homes should not be punished with fictitious taxes on “income” they never see. Abolishing the Eigenmietwert brings long-overdue fairness to older homeowners.

2. Simplification of the Tax System – The deemed rental value is a complex and bureaucratic construct. Removing it means more transparency and less administrative burden for taxpayers and authorities alike.

3. Encouraging Financial Responsibility – The current system incentivizes homeowners to keep their mortgages high just to benefit from tax deductions. A YES vote will encourage debt reduction and strengthen long-term financial stability for households.

4. More Realistic Taxation – Taxes should reflect real income, not hypothetical figures. By eliminating the Eigenmietwert, Switzerland moves toward a tax system that is both more logical and more just.

5. Fairness Across Generations – Younger families will continue to have access to property financing, but without the artificial tax incentives to carry debt indefinitely. Over time, this creates a healthier housing and finance market for everyone.