Currently, anyone who owns real estate must pay tax on the theoretical amount they could get from it if they rented it out. In return, the interest on the mortgage debt and the costs of maintaining and renovating the building can be deducted. Attempts to abolish this rental value have failed several times at the ballot box and in parliament since the beginning of the 2000s.
On Wednesday, the Council of States created a surprise by approving the solution of a complete change of system proposed by the conciliation conference, by 22 votes against 15 and 6 abstentions. The National followed by 114 votes to 57 and 19 abstentions.
The positions were very far apart. The National Council wanted, like the Federal Council, to completely abolish the rental value, including for second homes. The Council of States wanted to restrict the project to main residences only. The cantons feared a significant drop in revenue if second homes are also exempt.
The PS and the Greens voted against
At the last moment, the Council of States made an about-face and rallied behind the concept of the National Council. He also gave in on the new solution concerning the deduction of passive interest.
“The desire to abolish the rental value has won,” said Erich Ettlin (C/OW). “This solution has many advantages,” further underlined Martin Schmid (PLR/GR). The PS and the Greens as well as certain members of the Center voted against. Pascal Broulis (PLR/VD) criticized a “mediocre result”.
The problems far outweigh the advantages, for his part castigated MP Samuel Bendahan (PS/VD). There are many losers, notably construction companies which take action against undeclared work. The winners are the owners who have significant equity.
Obstacles still important
The effective abolition of the rental value should still take time. The project must still pass the final votes. In addition, the abolition of the rental value is linked to another file.
In order to compensate for the loss of revenue for tourist cantons, the National Council is proposing a new tax on second homes, which would come into force at the same time as the abolition of the rental value. The cantons would, however, be free to levy such a tax.
The new tax requires a modification of the Constitution with a compulsory referendum and therefore a yes from the people and the cantons. Last week, however, the Council of States did not want to discuss this project. On Thursday, he will make a second attempt. The National tacitly confirmed its entry into the project on Wednesday.
