Reform of the taxation of home ownership

On 15 August 2025, as part of the reform of the taxation of home ownership, the Federal Council recommended that the proposal to introduce a constitutional provision authorising the cantons to levy a property tax on second homes be accepted in the vote on 28 September.

Acceptance of this provision, which requires a double majority of the people and the cantons, is a precondition for the second part of the reform to come into force: the abolition of the taxation of rental value on primary and secondary residences.

In return for this abolition, the bill provides for a significant reduction in existing tax deductions. For example, building maintenance costs would no longer be deductible and the deduction for interest on liabilities would be abolished. Only a temporary, capped deduction would be granted to first-time buyers. It should be noted, however, that for rented or leased properties, interest deduction would remain possible but also limited.

The introduction of a property tax on second homes was conceived as a compensatory measure for tourist cantons such as Graubünden, Ticino and Valais, where this type of property is particularly widespread. If this provision were rejected, the abolition of rental value taxation would automatically lapse and the current tax system would remain in force. On the other hand, if the proposal is accepted, the abolition of rental value taxation will take place directly, without a new vote, within a period to be set by the Federal Council. 

If adopted, this reform will bring about a profound change in the Swiss tax landscape. On the one hand, it will abolish a tax considered by some to be unfair; on the other, it will significantly reduce the scope for tax deductions. Its precise financial impact remains difficult to anticipate, as it will depend on many factors. However, the main beneficiaries should be first-time buyers, as well as retirees and homeowners with low levels of debt. On the other hand, long-established homeowners who are still in debt and face high maintenance costs are likely to be at a disadvantage.