The tax burden on owner-occupied second homes

• Private Clients
• Real Estate
• Tax Law

Owners of owner-occupied holiday homes or holiday apartments (second homes) are currently taxed in the same way as for a property in which they reside. In the referendum on 28 September 2025 on the abolition of the imputed rental value and the creation of a property tax on second homes, a significant change in the tax situation is up for decision.

Anyone who owns property is considered to be financially capable. In fact, land and property tie up considerable financial resources, which are attributed to their owners. The tax system derives from this that the community uses these assets as a basis for various taxes and duties levied on natural persons.

Income tax on second properties

Real estate is subject to income tax. It is easy to understand that income from third parties for the use of a property is taxable as income. This applies to both private and commercial landlords. A special feature in Switzerland is that all private property owners who live in their own property also have to pay tax on income, known as the imputed rental value. This should correspond approximately to the income that could be achieved on the property market. The imputed rental value is sometimes far below this for cantonal and municipal taxes.

The taxation of income from real estate goes hand in hand with the possibility of deducting associated costs. Under current law, private owners can deduct financing costs (mortgage interest) and the costs of maintaining and repairing the property. Owners of holiday homes and holiday apartments, known as second homes, are also subject to this system.

The taxation of owner-occupied property via the imputed rental value, which has been in place for decades but has always been questioned, could soon change: if the system change is approved in the upcoming referendum, the imputed rental value will be abolished in future, along with the deduction of maintenance costs and mortgage interest for owner-occupied properties. Limited deductions for debt interest will only be available to first-time buyers of owner-occupied residential property (for a limited period).

Wealth tax on second homes

Real estate is also subject to wealth tax, but only in the cantons and municipalities. There is no wealth tax at federal level. The market value of the property is the starting point for calculating this tax. The tax value is usually lower. Debts associated with the property (mortgages) are deducted from the assessment basis. Owners of second homes are also subject to this system. The upcoming referendum has no influence whatsoever on wealth tax on second homes.

Property taxes on second homes

Around half of Switzerland’s cantons levy property tax. Traditional tourist cantons with a high number of holiday homes in particular make use of this source of funding. As these are so-called object taxes, the value of the property determines the amount of tax payable. The owner’s financial situation is irrelevant, which means that a mortgage has no impact. Property taxes are low, at 2-3 per mille of the taxable value. This is due to the constitutional principle that taxes must correspond to the economic capacity of the taxpayer.

Owners of holiday homes and apartments in the affected cantons also pay property tax in addition to income and wealth tax. A significant change is on the horizon here: the possible abolition of the imputed rental value is linked to the possibility for cantons and municipalities to levy an additional property tax on second homes. This would enable tourism cantons, particularly those in mountainous regions, to compensate for the loss of income tax revenue from owner-occupiers who are resident in another canton. The new constitutional provision put to the vote in the same bill therefore allows for the levying of a special tax on predominantly owner-occupied second homes that is significantly higher than the previous property tax, regardless of whether this still complies with the principle of taxation according to economic capacity. Further details are not yet known.

Conclusion

The tax burden on real estate is considerable. Whether the imputed rental value for owner-occupied residential property is abolished or continues to exist, the tax situation needs to be reviewed, particularly in the case of second homes.