The imputed rental value is gone, but the dispute remains
The imputed rental value is being phased out. But in Zurich, this is just the beginning of the next conflict. At the heart of the matter are heat pumps, solar roofs, and insulated facades. The canton must decide whether to continue offering tax incentives for climate-friendly renovations or to shift to a system of subsidies.
Energy-efficient renovations remain at the center of the tax policy debate in the Canton of Zurich, even after the abolition of the imputed rental value. Photo: HEV Winterthur Region
Effective January 1, 2029, the imputed rental value will be abolished throughout Switzerland. This means that the general deduction for property maintenance will also be eliminated for owner-occupied residential property. At the federal level, this also applies to investments in energy conservation and environmental protection.
However, a window of opportunity remains open for the cantons. They may continue to make energy-efficiency measures tax-deductible. This special provision is valid until 2050 at the latest. Zurich could thus retain an incentive for private investment in its building stock despite the system change.
Stocker Rely on Subsidies
The Zurich Cantonal Council does not intend to make use of this leeway. It plans to also eliminate cantonal tax deductions for energy-efficiency renovations starting in 2029. In doing so, the government is following a clear logic: without imputed rental value, the associated deductions should also disappear.
However, the building sector will not be left entirely without support. The cantonal government has proposed a cantonal framework credit of 60 million Swiss francs for the energy subsidy program for the years 2026 through 2029. Together with funds from the CO2 tax and the federal stimulus program, a total of 286 million Swiss francs could be available for the program, according to the canton.
Parliament, however, is drawing
Resistance is forming in the cantonal council from the political center and the right. Motion KR No. 227/2026 calls for energy-saving and environmental protection measures to remain tax-deductible even after the imputed rental value is abolished. The motion is backed by the FDP, SVP, Mitte, GLP, and EVP. The alliance aims to spur investment rather than hinder it by removing incentives. After all, anyone who replaces a fossil-fuel heating system, improves a building’s envelope, or generates solar power bears a large portion of the costs privately. Tax deductions directly reduce this financial burden through the tax bill.
Two Paths to the Same Goal
The conflict is not about “whether,” but about “how.” Direct subsidies can be specifically targeted and budgeted. Tax deductions, on the other hand, have a decentralized effect, are implemented quickly, and do not require a separate application for funding. Zurich already provides funding for heat pumps, district heating connections, insulation, Minergie-ECO retrofits, and consulting services. The existing program will continue unchanged through 2026. The open question is whether a tax incentive will remain necessary in the future.
A Decision with Significance
For property owners, the debate has tangible implications. It will determine how attractive long-term renovations will still be after 2028. For the canton, the stakes involve tax revenue, funding budgets, and the pace of decarbonization.