The “imputed rental value” trick that failed in court
Higher tax bills, delayed decisions, political squabbles. With the largest revaluation of its real estate since 1998, the canton of Aargau has stirred up a hornet’s nest. An external expert report now offers a clear assessment of a controversial political initiative. The demand by the FDP and SVP to freeze the imputed rental value is simply not feasible.
For the first time in nearly thirty years, all properties in Aargau were reappraised. The reason lies in a court ruling. The old values were far below market values and thus violated federal law. However, the implementation process ran into major problems, with incorrect addresses, incorrect ownership shares, and months-long wait times for decisions.
The canton acknowledges errors
According to the canton, of the 285,000 planned appraisals, about 11,600—or four percent—are still pending. Finance Director Markus Dieth apologizes for the resulting inconvenience. The IT service provider ELCA also acknowledges that, despite extensive testing, complex cases were not recorded correctly from the outset.
Why the Values Rose
The trigger was an administrative court ruling from 2020. It determined that numerous owner-occupied rental values were below the federal minimum threshold of 60 percent of the market rent. However, the value did not rise everywhere. For 38.3 percent of properties, it actually decreased, while for 60.5 percent, it increased.
The expert opinion speaks plainly
The FDP and SVP wanted to halt the increase until the imputed rental value is abolished at the federal level in 2029. An expert opinion by Professor of Constitutional Law Felix Uhlmann now confirms what the government has been saying for a long time: The motion violates federal law and cannot be implemented.
The parties move on
The SVP accepts the result but is calling for alternatives such as phased implementation or temporary tax deductions. At the same time, the party announces that it will demand a 5 to 10 percent reduction in the tax rate during the budget deliberations. FDP Grand Council member Adrian Schoop expresses disappointment with the quality of the rulings but welcomes the government’s culture of accountability.
The next vote is already on the horizon
Alongside the debate over the imputed rental value, Aargau is preparing for the 2027 tax law revision. The top income tax rate is set to drop from 11 to 9.75 percent, supplemented by a low-income deduction for incomes up to 75,000 francs. The proposal will reduce the tax burden on taxpayers by approximately 80 million francs annually, but will go to a referendum due to an official referendum filed by the SP, the Greens, and the EVP.