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Old 25.08.2021, 20:31
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Eigenmietwert abolished?

According to this article: https://www.srf.ch/news/schweiz/fikt...eigenmietwerts there are plans to abolish Eigenmietwert tax.
If I understand correctly below fragment, interests from mortgage will still be tax deductible. However I am not sure what they want to do to counteract high private debt?
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Zudem möchte der Bundesrat, dass Schuldzinsen unter bestimmten Bedingungen weiterhin von den Steuern abgezogen werden dürfen. Die Kommission will, dass Hypothekarschulden nicht mehr von den Steuern abgezogen werden können, um der hohen Privatverschuldung entgegenzuwirken.
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Old 25.08.2021, 21:03
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Re: Eigenmietwert abolished?

The vast proportion of taxation is wasted - the smaller the government the better run the country in general.
Would love to see this gone.
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Old 25.08.2021, 21:30
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Re: Eigenmietwert abolished?

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The vast proportion of taxation is wasted - the smaller the government the better run the country in general.
Would love to see this gone.
So would I and I don't even owe a house.
It's a crazy burden, specially for old people

If anyone wants to know why it exists:

<<Origin of imputed rental value

The origin of the imputed rental value goes back more than a hundred years. The tax was first introduced in 1915 during the First World War - as a one-off war tax. The state used it to compensate for customs revenues that collapsed as a result of the war.

The tax did not remain a one-off. After the Great Depression in the 1930s, the Federal Council reintroduced the tax in 1934: by emergency law as a federal crisis levy for the recovery of the federal budget.

Originally, the crisis levy was to be limited until 1938. Before the end of this period, the Federal Council decided, with the approval of the Federal Assembly, to continue the crisis levy as a military tax from 1945 until all war expenditures had been completely paid off.

The tax then became regular law with the approval of the people and the cantons in 1958.>>

For those able to vote: Beware to vote yes to anything that is declared temporary. The oldest Swiss trick to get people's yes. They keep prolonging it until everybody got used to it, then strike with the vote about implementing it in the law. This is only one example.
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Old 25.08.2021, 23:23
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Re: Eigenmietwert abolished?

Income tax in the UK was originally introduced to pay for the Napoleonic wars in 1803. It was re-introduced in 1842 as a temporary measure & has remained a tax ever since.

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So would I and I don't even owe a house.
It's a crazy burden, specially for old people

If anyone wants to know why it exists:

<<Origin of imputed rental value

The origin of the imputed rental value goes back more than a hundred years. The tax was first introduced in 1915 during the First World War - as a one-off war tax. The state used it to compensate for customs revenues that collapsed as a result of the war.

The tax did not remain a one-off. After the Great Depression in the 1930s, the Federal Council reintroduced the tax in 1934: by emergency law as a federal crisis levy for the recovery of the federal budget.

Originally, the crisis levy was to be limited until 1938. Before the end of this period, the Federal Council decided, with the approval of the Federal Assembly, to continue the crisis levy as a military tax from 1945 until all war expenditures had been completely paid off.

The tax then became regular law with the approval of the people and the cantons in 1958.>>

For those able to vote: Beware to vote yes to anything that is declared temporary. The oldest Swiss trick to get people's yes. They keep prolonging it until everybody got used to it, then strike with the vote about implementing it in the law. This is only one example.
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Old 25.08.2021, 23:32
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Re: Eigenmietwert abolished?

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Income tax in the UK was originally introduced to pay for the Napoleonic wars in 1803. It was re-introduced in 1842 as a temporary measure & has remained a tax ever since.
Riight. Before that the people lived happily, well fed and taxfree in GB.

Thing with the Eigenmietwert here is the people - repetitively - voted for it. A clear case of "selber Schuld".
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Old 26.08.2021, 07:59
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Re: Eigenmietwert abolished?

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According to this article: https://www.srf.ch/news/schweiz/fikt...eigenmietwerts there are plans to abolish Eigenmietwert tax.
If I understand correctly below fragment, interests from mortgage will still be tax deductible. However I am not sure what they want to do to counteract high private debt?
I thought this had been proposed for years though ? Is this actually any different ? I mean will it be law next year or anything like that ?
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Old 26.08.2021, 08:06
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Re: Eigenmietwert abolished?

They’ve been talking about this for decades. I’ll believe it when I see it.
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Old 26.08.2021, 08:27
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Re: Eigenmietwert abolished?

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So would I and I don't even owe a house.
It's a crazy burden, specially for old people

If anyone wants to know why it exists:

<<Origin of imputed rental value

The origin of the imputed rental value goes back more than a hundred years. The tax was first introduced in 1915 during the First World War - as a one-off war tax. The state used it to compensate for customs revenues that collapsed as a result of the war.

The tax did not remain a one-off. After the Great Depression in the 1930s, the Federal Council reintroduced the tax in 1934: by emergency law as a federal crisis levy for the recovery of the federal budget.

Originally, the crisis levy was to be limited until 1938. Before the end of this period, the Federal Council decided, with the approval of the Federal Assembly, to continue the crisis levy as a military tax from 1945 until all war expenditures had been completely paid off.

The tax then became regular law with the approval of the people and the cantons in 1958.>>

For those able to vote: Beware to vote yes to anything that is declared temporary. The oldest Swiss trick to get people's yes. They keep prolonging it until everybody got used to it, then strike with the vote about implementing it in the law. This is only one example.
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Income tax in the UK was originally introduced to pay for the Napoleonic wars in 1803. It was re-introduced in 1842 as a temporary measure & has remained a tax ever since.
Nothing is more permanent than a temporary tax measure. Almost every tax comes into existence through the same process:

Emergency --> Temporary tax to combat emergency --> Tax remains permanent after emergency goes away (and tax slowly gets higher).
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Old 26.08.2021, 08:29
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Re: Eigenmietwert abolished?

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They’ve been talking about this for decades. I’ll believe it when I see it.
Indeed. The same applies to the tax penalty married couples pay (compared to non-married couples). That has been on the cards since at least 2004.
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Old 26.08.2021, 10:17
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Re: Eigenmietwert abolished?

I'm not sure how I feel about this.

While it would be nice to pay a little less tax*, the question that looms large is: When the Powers That Be see a hole in the tax coffers after getting rid of Eigenmietwert, what will replace it? Because y'all know that eventually something else - possibly worse -will be put in it's place.

The countries I have lived in all had some form of property tax, most of which took a much larger bite out of my wallet than Eigenmietwert does. If you have to pay a property tax, at least Eigenmietwert is a progressive rather than flat tax. Which, IMO, is a fairer form of taxation.

The theoretical value of your home is added to your income, you pay at your income tax rate. As such, Oma with only her pension will be paying at a lower rate than Herr Reichmann with his gazillions. Which means Oma hopefully won't end up forced to sell the home she loves where a lifetime of memories were made because she can't afford the property tax.

Which is what all too often happens back back in Chicago and elsewhere in expensive property markets/high tax states the US. Property taxes are often a flat rate there based on the home's market value. Wiith rising prices seniors - who long ago paid off their mortgages and thus can live within their small pensions - often find themselves unable to afford 20, 30, 40K per year in property taxes. And so must sell.

Flat property taxes also hit young people. A young family starting out, early career so not earning too much, may be able to afford the purchase price of a home but cannot swing the high annual property taxes - and so can't get on the property ladder.

If I have to pay property tax, I'll take Eigenmietwert over the other regimes I've lived with any day.

To give you an idea: My current Eigenmietwert tax is about half of the property tax I paid on my last house in Chicago. And the Swiss house is valued at least 5 times higher.

I look at Eigenmietwert as the devil I know. It's the unknown lurking around the corner that worries me more.




* As an American I don't really spend much time thinking about reducing Swiss taxes, since any savings pretty much ends up in Uncle Sam's pocket.
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Old 26.08.2021, 11:03
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Re: Eigenmietwert abolished?

There is some logic to the current system. The tax relief on mortgage interest has a buffer effect for mortgage holders during times of high inflation or, better put, times when high interest rates are used in an attempt to control inflation. Increases in interest rates can be partly compensated for by decreased taxes.

It [the tax system] also can be used to steer people towards certain policy goals by, for example, making energy reducing building improvements appear financially attractive.

Also this system tends to benefit the banking sector, an important Swiss industry. Some people maintain a mortgage, they may not need, so as not to miss the "opportunity" of paying less tax. The banks profit from providing the mortgage and also from managing the surplus funds which could have been used for paying off such mortgages. People who try this should do their sums very carefully.

Further, as already pointed out, a tax, once established, it very difficult to get rid of. Renaming and restructuring it is the preferred option.
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Old 26.08.2021, 11:39
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Re: Eigenmietwert abolished?

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I'm not sure how I feel about this.

While it would be nice to pay a little less tax*, the question that looms large is: When the Powers That Be see a hole in the tax coffers after getting rid of Eigenmietwert, what will replace it? Because y'all know that eventually something else - possibly worse -will be put in it's place.

The countries I have lived in all had some form of property tax, most of which took a much larger bite out of my wallet than Eigenmietwert does. If you have to pay a property tax, at least Eigenmietwert is a progressive rather than flat tax. Which, IMO, is a fairer form of taxation.

The theoretical value of your home is added to your income, you pay at your income tax rate. As such, Oma with only her pension will be paying at a lower rate than Herr Reichmann with his gazillions. Which means Oma hopefully won't end up forced to sell the home she loves where a lifetime of memories were made because she can't afford the property tax.

Which is what all too often happens back back in Chicago and elsewhere in expensive property markets/high tax states the US. Property taxes are often a flat rate there based on the home's market value. Wiith rising prices seniors - who long ago paid off their mortgages and thus can live within their small pensions - often find themselves unable to afford 20, 30, 40K per year in property taxes. And so must sell.

Flat property taxes also hit young people. A young family starting out, early career so not earning too much, may be able to afford the purchase price of a home but cannot swing the high annual property taxes - and so can't get on the property ladder.

If I have to pay property tax, I'll take Eigenmietwert over the other regimes I've lived with any day.

To give you an idea: My current Eigenmietwert tax is about half of the property tax I paid on my last house in Chicago. And the Swiss house is valued at least 5 times higher.

I look at Eigenmietwert as the devil I know. It's the unknown lurking around the corner that worries me more.




* As an American I don't really spend much time thinking about reducing Swiss taxes, since any savings pretty much ends up in Uncle Sam's pocket.
You already pay property tax on your home. Property tax in Switzerland is in 0/00, income tax - on an income you're not having - is in %.
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