What can I deduct from tax as a homeowner?
Homeowners often need to dig deep for their property’s upkeep. So it’s all the more important that you understand your rights and obligations as a taxpayer. We’ll show you what you can and can’t deduct from your taxable income.
What can be deducted from your taxes
Maintenance and renovations
In principle, all costs for maintaining and renovating your home are deductible. This includes repairs to preserve the value of your property such as painting, gardening and renovation work.
Energy-saving measures
Investments in energy-saving measures in buildings can also be tax-deductible. The costs of installing a photovoltaic or solar power system, for example, can be deducted from your tax. If plumbing or roofing costs are also incurred, these are deductible as building maintenance costs.
Interest on debt
In addition to maintenance costs, Swiss tax law also allows interest on debt to be deducted – regardless of whether a mortgage or another interest-bearing loan was taken out for the purchase of the property. Ground rent is also deductible for leased properties.
What has to be taxed
Value-enhancing investments
Value-enhancing investments are generally not tax-deductible. For example, if you convert your bathroom into a wellness oasis, you cannot deduct the value-adding portion from your taxable income. This also applies to energy costs. Buying electricity, gas, oil or water is considered part of normal living and operating costs. These also include charges for telephone, internet and TV.
Estimated rental value
The estimated rental value, i.e. the expected rental income, must also be taxed. Major renovations and investments lead to an increase in estimated rental values – which can have a negative impact on the amount of tax you owe.
Conditions for the effectiveness of tax deductions
In every canton in Switzerland, homeowners can choose between a flat-rate deduction or a deduction of the actual costs. The flat rate is usually 10 to 20 % of the estimated rental value or rental income. If you decide against a flat-rate deduction and use the actual costs as the basis, collecting receipts is unavoidable. All invoices and receipts for deductible expenses must be submitted to the tax authorities. If receipts are incomplete or even missing, only the flat-rate deduction is permitted.
In summary: you can deduct maintenance costs, energy-saving investments and interest on debt. You can choose between flat-rate and differentiated deductions. What you do have to pay tax on, however, are energy and living costs, as well as the estimated rental value, which can increase as a result of renovation work. For this reason, you should carefully consider every investment in your property.
