The abolition of the imputed rental value and the impact on your tax and pension planning

Planning aspects with a view to retirement

Property prices and value retention

The market is likely to become more differentiated in the coming years. In particular, properties that do not have an energy-efficient renovation backlog before the reform comes into force could become less attractive. Even after the reform, certain energy-related costs will be tax-deductible depending on the canton.

In practice today, we often find that properties with a manageable renovation backlog are affordable on the one hand, but are also very interesting on the other, as the renovation and maintenance costs can be deducted from taxable income and, if optimally distributed over more than one tax period, a significantly lower tax burden can be achieved after the purchase.

For property owners, this means that maintenance will become an active task in the coming years, not only from an ecological but also from a financial perspective. Those who renovate or modernise at an early stage will secure the market value of their property and continue to benefit from tax deductions.

Will properties with a refurbishment backlog become shopkeepers after 2028 or will prices fall?

I see this as a realistic scenario in rural regions. This is because it is also expected that the supply on the market will increase in the coming years with more houses from the "baby boomer generation". Particularly in regions with a tendency towards migration, this will lead to an oversupply compared to new builds. However, the prediction made a few years ago that baby boomers would sell their properties has not yet materialised.

However, I see a lower risk in urban centres. In these regions, both the demand for housing and the development of tenancies is much more pronounced than in rural areas. As refurbishment costs can generally be financed via the mortgage, the purchase of property remains more cost-effective than a comparable tenancy, especially under the current interest rate conditions. It can also be assumed that demand in urban areas will remain high.

Holistic planning

Through skilful planning, investments can still be spread over the tax periods 2025 to 2027 in order to make the most of the tax effect. Among other things, this is relevant for owners who are already planning for retirement: A targeted sequence of maintenance and renovation measures makes it possible to balance income and deductions and smooth out the tax burden in the final years of acquisition. For example, if you retire after 2031 and are still planning to buy into the pension fund, it is important to check individually whether the money should be used for maintenance instead of buying into the pension fund and whether the purchase should be postponed until 2028. In this way, the funds can first be used to eliminate existing refurbishment backlogs. This safeguards the value of the property, reduces the risk of later high investments and enables targeted tax and pension planning. Once the renovations have been completed, the pension fund purchases can be made at a later date if necessary in order not to lose the tax advantage and to break the tax progression over several years. In our example with a purchase in 2028, you would also remain flexible when it comes to the question of all questions "Pension or capital?" due to the vesting period of 3 years.

Pillar 3a - pause and top up later

There is not always enough liquidity to renovate the house or make full 3a contributions at the same time. The reform and the change in the law to retroactively close gaps in pillar 3a from 2025 onwards therefore offers a side effect; if the individual situation allows, it could be worthwhile temporarily pausing or reducing 3a payments. This creates room for manoeuvre in liquidity planning and allows funds to be used in a more targeted manner, for example for early renovations. After 2028, you can top up your 3a account retroactively and break the tax progression again. The tax savings from the current years can in turn be used for payments into the third pillar.

Amortise your mortgage?

This was also repeatedly emphasised as an argument by the proponents. "Debt reduction". In my opinion, however, this is fantasy thinking. At best, a handful of people will repay part of their mortgage. However, this group of people is limited to those who already have a low mortgage debt, have sufficient liquidity and do not wish to make any other investments. As housing costs are already low due to the persistently low interest rate level (+/- 1.60 % for 10 years), the vast majority will probably not want to repay the mortgage and block the money, but keep the liquidity at their free disposal. For example, to be flexible in the event of major purchases or to invest in the stock market, where a better return can generally be achieved over a longer time horizon. Depending on the initial situation and options, amortisation of the mortgage may leave you with less money to live on at the end of the day.