Imputed Rental Value: Definition
The rental value in Switzerland and in the Valais concerns the owners of a property owners, who live there. The rental value is considered income, as it is estimated that an owner could receive a certain amount of money if they were to rent out the property they own.
The rental value is then taxed like any other income, even if it is not actually received. This is because owning your own home is considered to offer advantages to the occupants, advantages that a tenant does not have.
In short, this value puts tenants and landlords on an equal footing.
Tax Deductions and Taxation
In Valais, the rental value is still advantageous for owners who declare it. Declaring the rental value entitles the owner to certain tax deductions.
If a building is recent (10 years or less), 10 % of the yield value (what an owner could earn if he rented out his property) is taken to calculate an advantage.
If the building is already over a certain age (more than 10 years), the advantage will be greater since 20% of the rental value will be taken into account. In general, it is also possible to obtain an effective deduction for maintenance costs.
Calculating the Imputed Rental Value
As we have already seen, the imputed rental value generally corresponds to the amount of rent that an owner would receive if the property were rented out.
In general, the rental value amounts to a minimum of 60% and a maximum of 70% (depending on the canton) of the amount that could be earned while taking into account the current market. In Valais, the value is one of the most advantageous, set at 60% of market rent.
We therefore look at the income that a similar property could generate, depending on the building's age, location and size.
Sample Calculation
Let us say you own a 2-bedroom apartment in the canton of Valais, where the current market rental rate is around CHF 750. The annual rental price would therefore be CHF 9,000 (because 750 x 12).
If we start with the minimum taxable rental value (60%), we obtain CHF 5,400 (because 9,000 x 60%). Other deductions may be made depending on the condition of the property (how old it is for example).
Reforms Concerning Rental Value
Rental value in Switzerland has often been the subject of criticism. Many consider it unfair to be taxed on income that is not actually received. To improve the situation, the Federal Council has been in favor of a change in the laws concerning imputed rental value.
By 2021 and 2023, Switzerland was heading for a partial removal and even a total rescinding of imputed rental value, but in the end this was unsuccessful, and it still applies to all property owners.
Frequently Asked Questions
What is rental value?
The rental value is a fictitious taxable income, corresponding to a minimum of 60% and a maximum of 70% of rent that an owner would receive if he rented out the property. In Valais, for example, it is 60%.
What kind of tax deductions am I entitled to when I declare my rental value in Valais?
You can benefit from deductions regarding property maintenance and acquisition (mortgage interest, maintenance and/or repair costs, energy improvement costs, etc.).
How do you calculate the rental value of a property in Valais?
In Valais, to calculate the rental value of a property, we need to know the current market rental price and then calculate the annual amount, which we then divide by 60%, taking into account any deductions.
Has Swiss rental value been abolished?
Despite several attempts at partial and complete abolition, the rental value is still mandatory for property owners.
