How do I tax real estate and rental income?

Property ownership and rental income are part of taxable income and must be reported on the tax return. For property ownership, the imputed rental value is relevant for tax assessment.

In addition to employment income, income tax is also levied on asset returns from movable and immovable assets (Art. 20 – 21 DBG, see also blog post). Income from immovable assets includes in particular (Art. 21 para. 1 DBG):

• Value of the own use of property (imputed rental value)
• Income from leasing and renting of properties
• Building rights interest

Anyone who owns a single-family home or condominium must declare the value of the own use (imputed rental value) as fictitious income for tax purposes. The property register must include the imputed rental value according to a current estimate. Current estimates can be obtained from the competent municipal tax office. In return, however, the interest on the mortgage and maintenance costs can be deducted from taxable income. The usufruct of a property and gratuitous living rights are treated as ownership. The entitled parties must also declare the imputed rental value for tax purposes. All rental and lease income is taxable. Compensation from tenants for hot water, heating, and cleaning of the stairwell is only taxable if it exceeds the actual expenses.Choice between flat-rate deduction and actual costsWhen deducting maintenance costs for property in private assets, one can usually choose annually in most cantons whether to deduct a flat rate or to claim actual costs. It is worthwhile to declare actual costs if they are higher than the flat-rate deduction. For properties in business assets, only actual costs can usually be deducted. Generally, only value-preserving expenses are considered maintenance costs. Investments that serve environmental protection and energy efficiency are treated as maintenance costs. Purchases of consumables (e.g., curtains, lamps, tools, and furniture) and value-enhancing expenses do not constitute maintenance costs.