Swiss Voters Support $2.1 Billion Tax Relief for Homeowners

(Bloomberg) — Switzerland voted to abolish a century-old system of taxing property, a move that will see lower dues for homeowners and potentially boost real estate prices.

The proposal was backed by 65% of the electorate, according to a preliminary government estimate on Sunday. Polls ahead of the plebiscite had suggested a tight outcome.

Homeowners’ property tax burden could drop now by as much as 22%, depending on the individual’s situation, according to estimates by Raiffeisen Switzerland. The bank also reckons that house prices will increase by 5% to 7% over the next 12 months as living in one’s own home becomes more attractive.

Switzerland has the lowest rate of home ownership in Europe, which means that only about four in ten Swiss will benefit from the new rules.

Core to the reform is that there’s no more tax on the theoretical rent that homeowners could earn for their property on the market. Scrapping this so-called imputed rental value was hashed out over years of discussion in parliament and has the government’s backing.

Instead, cantons will get the right to tax second homes — such as mountain chalets. Still, property owners will be better off overall. The measure will cost public coffers about 1.7 billion francs ($2.1 billion), according to government estimates.

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