Background:
Eigenmietwert is the assessed value of not paying rent that home owners have added to their income. There has long been a move to abolish this, but as it provides a constant and safe income for the tax authorities, politicians have not given it much support.

The house owners' association (HEV), who in my opinion are also against abolishing the charge, came up with a counter proposal. This would abolish Eigenmeitwert only for those who are retired, if they opt for it..

However, as with the original proposal, deductions such as for property maintenance and mortgage interest will no longer apply if pensioners opt for this.

The problem is that many homeowners have already maximized their mortgage to counter the Eigenmietwert addition to their incomes.

I personally would be about CHF750 a year better off with this porposal.

The vote be held on 23 September under the title "SICHERES WOHNEN IM ALTER". I looks as though it will be accepted...

More here, in German:
http://www.efd.admin.ch/dokumentatio...703/index.html
and here:
http://www.vimentis.ch/abstimmungen

Interesting. But I've always thought that the amount of this additional tax is almost exactly offset by tax relief on the normal 65% interest-only mortgage. Would that also be abolished under the proposals?

(Not going to try and read the German article myself.)

The traditional idea was to ensure mortgage interest payments matched the net (after maintenance allowance) Eigenmietwert. This makes paying off a mortgage a disadvantage. Also with current low interest rates, many will find they cannot make the balance between the two...

I guess. So we may actually benefit even if they did remove the tax relief?

Reminds me - our mortgage is up for renewal, and we need to choose between the variable rate (currently ~2.5%) and a fixed-rate, fixed-term one. No contest there, but we've been given the choice of anything from 1 to 10 years, with a 1 year at around 1.15%, rising to 1.5% for 5 years and perhaps 1.8% for the ten year period (can't remember exactly). Not sure which offers the most peace of mind, TBH. any thoughts welcome!

The biggest problem with a 10 year mortgage is that should you want/have to close it down eg. If you left the country or wanted to pay it off, the penalty would be a much as paying for the full 10 years...

Not managed yet to work out exactly what it would mean for us. We have a very small mortgage, and a very low rentable value because of location and age of property, and because we use part of the house for caricative purpose - we are both retired on UK pensions, so any help would be great in our 'old age'

Really? I didn't know that. And clearly would need to check with the bank. But we have no plans to ever leave CH, so it's perhaps not really a big factor for us.

i think the current system is fair. the proposal would be a straight out gift to owner occupiers of retirement age.

I'd love to see an end to Eigenmietwert...

We have a tiny mortgage, and a very low interest rate, but in the last Eigenmietwert assessment - just before the bubble really took off - simple small homes like ours appreciated significantly. Our Eigenmietwert is now quite a bit more than the little mortgage interest we can deduct.

Fortunately we live in SZ, which also has a low tax rate. So although Eigenmietwert is not offset by deductions at least the resulting tax doesn't hurt too much.

But if I were to buy my dream home in SG... The house is priced in line with the current bubble market (even in nowheresville SG!) and Eigenmietwert would be figured on that bubble market price - ouch! In SG the tax rate is about double SZ, so that addition to our income and the resulting tax would be quite painful indeed.

We could swing it now, while OH is working. But if we were to buy that dream house, after retirement we'd feel the Eigenmietwert pinch. If I could vote, I'd vote 'yes' in a heartbeat.

I see very little fair in charging people who have saved, so they can then buy, so that they don't disadvantage those who don't save.

It's hardly a gift, CHF750/year for me. In the UK pensioners get free bus passes and free prescription and there's no Eigenmietwert...

If interest rates rise, I suspect you will be able to get out of your mortgage for a hefty premium paid to you by the bank, the reverse has been true in the recent past due to falling rated.

How about getting more than one mortgage with different lengths, according to your level of risk aversedness. I'm in favour of the proposal, since I'd like to pay off my mortgage.

Actually, there is a bit more reasoning behind this:

Not paying taxes on rental income (you are actually renting from yourself) is a form of home ownership subsidy.

This home ownership subsidy generates fictitious property demand and pushes prices up.

Switzerland is right, the rest of the world is wrong on this point.

Worst case, you exempt people from ownership tax, then, if you want to introduce some degree of fairness, you would have to make rental payments tax deductible.

It will all have an impact on government deficit and taxes would have to be raised somewhere else. A matter of who shouts louder.

Anyway, the whole thing is sh..t. The young normally rent, the old -and richer- own more. So on top of leaving the young with a mountain of debt, now you want to make the richer, richer, and the poorer young, poorer.

Psssst....negating the Eigenmietwert cost with the mortgage interest deduction is a ruse promoted by the banks to convince buyers that paying perpetual interest on 80 percent of the purchase price is a good idea.

The banks don't want you to pay off the mortgage...keeping you locked into a huge mortgage for life is how they make their money.

exactly. as i said, the current system is fair as it puts OO and renting on the same level (actually, it probably still works out slightly better as an OO).

the proposal would not only unfairly benefit OO over renters, but only retired OO over renters.

while i see this happening as the rich retired homeowners successfully manage to lobby for tax breaks in their favour eventually, i'm not sure if they can push it through now.

of course you don't. you stand to benefit from it so probably are being very selective in what you see and think...

As someone closer to the old than the young, can I just ask you POLITELY to go fsk yourself? <GOF mode>I don’t see why the young should have it easy – I started from nothing with no advantageous other than brains and attitude and I don’t see why I shouldn’t be able to enjoy the fruits of my labours when I retire.</GOF>

You say that like it’s a bad thing. Are you seriously suggesting that even those who’ve scrimped and saved to own their own property should effectively be penalised and made to pay as if they were still renting too? That’s just ludicrous – might as well just ban private ownership of property if you’re not allowed to benefit from it.

Imagine.

When I was poor, I agreed that this was a bad thing. Now I'm rather better off, I can see the merits of the status quo...

If it is passed, it won't make a huge difference to the taxation system, surely. The 0.0001% of the total tax take will just come from somewhere else. "Taxation" and "Fair" are not words that exist in the same sentence (except with a "not" between them).

I'd want to pay off the French one first. Right now I'm still getting more interest on savings than the mortgage rate, so it's not worthwhile. Plus the cash is in the UK, so not wanting to bring it over until exchange rates improve.

In any event, if the tax relief on the mortgage interest payments continues, and the rates stay down at around 1.5%, I really don't see why I'd be too keen to pay it off anytime soon.

65% is the norm, I believe. The other 15% is normally on a repayment basis. With us, it is anyway, and I was given to understand that it's the normal approach.

I don't get our bank - they're actually happy to have us pay a lower interest rate than they would give on savings. Something seems wrong with that, but we just surmised that we must have got to the point where being rich helps make you richer, or something

P.S. No, we're not rich.