On the occasion of the consultations on the proposal to abolish the taxation of a fictitious «own rent» for self-occupied residential property, the National Council has repositioned itself on the question of private debt interest deduction. The Homeowners’ Association is taking a stand.

The Federal Law on the Taxation of Residential Property is intended to revise the current tax system and to abolish the taxation of fictitious «own rent» for self-occupied homes, which has been highly controversial for decades. Both councils are in agreement on this in principle. However, there are still two differences between the decisions of the National Council and the Council of States, namely on the amount of interest deduction on debt and on the question of abolishing the value-of-own rent tax only for self-occupied first homes or even for second homes.

HEV supports the regulation of the Council of States

In its first consultation, the National Council had supported a deduction of private debt interest amounting to only 40% of taxable asset income, which, according to the Swiss Homeowners’ Association (HEV), would have penalized in particular other property owners who would still have to tax an income (rent interest on rented apartments, net rental value in the case of secondary properties). To protect these taxpayers, the Council of States favored a deduction of private debt interest up to a maximum of 70% of private asset income.   

National Council follows request for a quota-restrictive deduction of private debt interest

At second reading, the National Council has now accepted the request of its commission for a quota-restrictive deduction of private debt interest based on the ratio of immovable assets (excluding self-occupied home ownership) to total assets. According to HEV, such a proposal is administratively burdensome and thus does not lead to the desired administrative simplification of the tax system.

Change in private debt interest deduction applies to all taxpayers

The HEV Switzerland therefore continues to support the regulation of the Council of Estates for a deduction of private debt interest amounting to a maximum of 70% of taxable asset income. «Such a solution is administratively simple to implement. Above all, however, this solution takes into account the fact that this change in the private debt interest deduction applies to all taxpayers, not just to self-occupied home owners», says the HEV.

Change of taxation system also for self-occupied second properties?

The National Council then continues to advocate extending the change of taxation system to include self-occupied second properties. Given the threat of tax losses in the tourism cantons due to the abolition of the «own rental» of second properties, the National Council wants to create a new constitutional authority for a property tax in parallel with the proposal in order to counteract this risk. «However, this requires a constitutional amendment and therefore a referendum, which would lead to a considerable delay», emphasizes the HEV.

The HEV Switzerland therefore supports the proposal at this stage, which initially seeks to abolish «ownership» for self-occupied residential property at the main residence. «The issue surrounding the taxation of second homes can then be tackled in a second step», he concluded.