Tax implications
Although private landlords were not the primary target of the legislative reform, the change in the tax system also has fiscal consequences for them. Unlike owner-occupiers, there is no abolition of imputed rental value in this case. Rental income therefore remains taxable as ordinary income. In principle, maintenance costs for rented and leased properties remain deductible. However, the deductibility of investments aimed at energy efficiency and environmental protection is restricted.
"What was merely an option yesterday has become a strategic necessity for many private landlords today."
At the federal level, these deductions are eliminated entirely. The cantons, however, may continue to allow deductions for demolition costs as well as for investments that serve energy efficiency and environmental protection purposes. It can be assumed that the majority of cantons will continue to permit these deductions even after the system change. As a result, the additional tax burden in this area is expected to remain limited. By contrast, the consequences of the new rules governing the deduction of debt interest may be significantly more severe.
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