Tax on the rental value

June 6, 2019

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In Switzerland, each owner of a property must pay a tax to the state and the canton on his property. This tax will be calculated on the basis of the rental value of the dwelling.

What is the rental value tax?

The tax on the rental value has existed since the decree of the Federal Council of December 9, 1940. The rental value of a property can be defined as the price at which a property is rented, or is the rent that owners could benefit if they rented their property. According to article 1 of the decree of 5 April 1979, "The land tax on built properties is a real municipal tax based on the rental value of any property. "

How to calculate the rental value of a property?

To determine the amount of a rental tax, it should be based on a comparable rent: difficult to do when the building is inhabited by its owner who does not pay rent and is therefore not aware of the rental value of his property. It is then necessary to use the so-called "comparative" technique, by which one will operate on a comparison with other similar leased dwellings. This technique only works correctly under several cumulative conditions: the value of the use of the property must correspond to the rent that a third party would have to pay in the same circumstances, for a building of the same nature, and having the same characteristics (situation, age, the number of pieces ...)

Who is subject to this tax?

Rental value is the amount that home and apartment owners living in their property must add to their taxable income. The rental value of a building is added to the income of its owner if he lives in the building.
A decision of the Federal Court of Geneva has refined this principle, considering that must also be subject to the tax on the rental value the owner who does not live regularly in the apartment, but who keeps it at his disposal . In the case of secondary residences, an owner who intends his holiday home for his own personal use must also be subject to the tax on the rental value.

In August 2018, the Economics Committee of the Council of States put the subject back on the table: should we abolish the tax on the rental value for homeowners?
This proposal must be examined at the beginning of the year 2019 and gives rise to shared opinions.

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