Swiss Voters to Decide on Second Home Tax Reform

Switzerland is preparing for a crucial vote on September 28, 2025, that could fundamentally reshape its property taxation system. The Federal Council and Parliament are jointly backing a constitutional amendment that would introduce a new approach to taxing second homes while eliminating the long-standing 'imputed rent' system. This significant reform represents a careful balance between maintaining fiscal stability and modernizing Switzerland's property tax framework.

The proposed reform introduces several fundamental changes to Switzerland's property taxation system. Most notably, it would abolish the current imputed rent system, where homeowners must declare theoretical rental income from their properties. The reform also includes special provisions for first-time homebuyers, who would receive temporary deductions on mortgage interest payments for primary residences. Additionally, most existing tax deductions would be significantly reduced, simplifying the overall tax structure for both homeowners and administrative bodies.

The financial impact of the reform would vary significantly depending on prevailing interest rates. Government analysis indicates that at mortgage rates around 1.5%, the combined revenue for federal, cantonal, and communal authorities could decrease by approximately CHF 1.8 billion. However, if rates exceed 3%, the reform could generate additional revenue. The impact on individual homeowners would similarly depend on their mortgage situation, with those having largely paid off their mortgages potentially seeing reduced tax bills under low interest rate scenarios.

A key feature of the reform is the autonomy granted to individual cantons in implementing the new second-home tax. Each canton would have the authority to decide whether to introduce the levy and determine appropriate rates based on local conditions. This flexibility is particularly significant for tourism-heavy cantons, which could use the new tax mechanism to offset potential revenue losses and address specific regional challenges in the property market.

Previous attempts to reform Switzerland's property taxation system, particularly regarding imputed rent, have faced challenges due to concerns over maintaining too many deductions. The current proposal represents years of careful deliberation and compromise in Parliament, resulting in what the Federal Council considers a balanced approach. The success of this reform could mark a significant milestone in Swiss tax policy, potentially setting a new standard for property taxation while addressing long-standing concerns about debt incentives in the housing market.