Imputed Rental Value: A Growing Burden for Retirees – Zurich Plans Legal Relief

The imputed rental value has long been a source of frustration for many homeowners – but for some, it has become a serious financial burden. Particularly affected are elderly individuals who have paid off their homes, rely on modest retirement incomes, and are still required to pay taxes on the so-called “fictitious income” derived from living in their own property. This rule can force pensioners out of their homes simply because they can no longer afford the tax burden.

1 in 50 Property Owners Faces Financial Hardship

In the Canton of Zurich, it is estimated that two to three percent of those subject to imputed rental value taxation are significantly affected. That means roughly 1 in 50 property owners faces severe financial difficulties due to the taxation of their primary residence—and may even be forced to sell their home. This is an unacceptable situation considering many of these individuals spent their lives working toward homeownership and have already paid off their mortgages.

Hardship Relief to Return—Now with Legal Basis

Until 2023, Zurich had a type of safety net known as the Hardship Deduction, which provided tax relief for severely affected individuals. However, both the Zurich Administrative Court and the Federal Supreme Court ruled that this measure lacked a sufficient legal foundation and it was discontinued.

Now, Zurich’s cantonal government aims to reinstate this relief—but this time with a clear legal basis. The proposal, led by Finance Director Ernst Stocker (SVP), is backed by a majority in the cantonal parliament—with the exception of the Green Party and parts of the GLP. The parliamentary commission emphasized: “No one should be forced to leave their home due to the imputed rental value.” The relief would be applied strictly to proven hardship cases—where the imputed rental value leads to long-term excessive tax burdens.

A Signal for Property Rights – But Political Debate Remains

The SVP describes the move as a “strong signal in support of property rights” and sees it as a way to protect those who have realized their dream of homeownership through years of discipline and hard work. Some members of the commission suggested introducing a payback obligation if the property is later sold—but that proposal was rejected. The Green Party criticized the measure, stating that homeowners are not among the most disadvantaged groups in society.

Possible Nationwide Abolition on the Horizon

The debate goes beyond Zurich. A national vote is expected in September, when the Swiss public may decide to abolish the imputed rental value system altogether. Should this reform go through, Zurich could face a shortfall of approximately 150 million Swiss francs in annual income tax revenue—about two tax percentage points. However, the cantonal government notes this is only a rough estimate.