The frequent referendums in Switzerland are the cornerstone of its system of direct democracy, which allows ordinary citizens to directly challenge laws, propose constitutional changes, and veto major government decisions. Instead of just voting for politicians every few years, Swiss voters are called to the ballot box roughly four times a year to vote on multiple national, cantonal, and local issues simultaneously. Most of these referendums are fairly parochial topics, rarely observed internationally.
But every now and again, something more significant comes up. This is where we are now, with two referendums that may have a tangible impact on the property market, especially in the mountains. The market is strong, there is precious little for sale, and there is pressure to do something.
The measures that are proposed, as we examine below, have potential to take some heat out of the market - it may become less fiscally attractive to rent out your ski property, or to renovate. However, if the proposed Lex Koller revisions pass - unlikely in APi’s opinion, at least in their current form - the outcome may be even less for sale.
These proposals, even if diluted, appear likely to have a greater impact on the non-resident holiday home buyer in Switzerland. At this moment in time, we believe these topics are barely on the radar of non-resident buyers.
Abolition of imputed rental income (Eigenmietwert) in Switzerland – implications for foreign homeowners and buyers.
The concept of Eigenmietwert rests on the principle that a homeowner who lives in their own property derives an economic benefit equivalent to the rent they would otherwise have to pay. This theoretical income is added to ordinary income and subjected to federal and cantonal income tax.
Set to take effect in the coming years, the abolition will remove the need to declare and pay tax on this "fictitious" rental income. However, it will also eliminate major tax offsets, meaning the net effect will largely depend on the property's mortgage and maintenance status and the cantons’ response to foregone tax income.
Our primary focus in this note is identifying implications for buyers/owners of holiday homes who are not resident for tax purposes in Switzerland.
Key Impacts for Foreign Holiday Homeowners
Loss of Deductions: Homeowners will no longer be able to deduct maintenance costs, renovation expenses, or mortgage interest. A hybrid system of tax deductions for energy-saving measures will be introduced. While such deductions for direct federal tax will cease, they will continue for cantonal and municipal taxes. However, for non-tax resident owners who do not rent out the holiday home, there would neither be any Swiss theoretical nor real income from which these deductions would be taken and therefore no income tax to pay. Local property and wealth taxes will continue to be payable and are not subject to change.
Nuances for renting out your property: some owners decide to rent out their property when they are not using it themselves. While long-term rentals are forbidden for foreign owners, a light rental programme may allow for proportional deductions relating to the income-producing period. Further guidance and clarification is needed.
New Second Home Taxes: To offset revenue losses from abolishing the imputed rental value, cantons now have the legal authority to introduce a special property tax on second homes. Popular mountain or tourist regions like Valais were against this abolition since their municipal budgets rely significantly on the levy. The local tax burden could increase depending on what local municipal or cantonal rates are established. As any new special tax would only apply to second homes, they could be taxed more heavily than primary residences, which may result in a narrowing of the “second home premium” caused by the Lex Weber restrictions on new second home building.
Résidences de Tourisme: these have sprung up in response to the restrictions of Lex Weber as developers have sought legally compliant new properties to sell to foreigners. Since they come with rental obligations it is not yet clear whether they will maintain deductions, nor how they will be subjected to any future second home tax. Economically active accommodation rather than empty second-home “cold beds” is their raison d’être – this is especially relevant in tourist areas where authorities are sensitive to housing shortages and tourism bed capacity.
What’s next?
Implementation Timeline: The reform will take effect in 2028 (exact timing depends on the specific canton). Current tax rules apply until then.
Possible impact on the property market
We have observed how even older Swiss properties are generally immaculately maintained. This is especially the case for condominium buildings. The abolition of tax deductions for renovation works means owners will lack a major incentive to maintain their homes. Old properties that require significant maintenance and upgrades may attract fewer buyers since they will no longer offer tax benefit, resulting in a negative impact on values.
Mortgage interest deduction effectively subsidised the cost of borrowing. With that subsidy eliminated, the after-tax cost of carrying a mortgage rises. This may tighten bank affordability thresholds in high value property markets such as certain ski resorts.
Second-home financing. Will underwriting rules differ for secondary or holiday residences, given the potentially different cantonal tax treatment?
Proposals to amend Switzerland’s Lex Koller rules on foreign investment in real estate.
As is the case in many of its neighbouring countries, Switzerland faces a housing shortage. The populist Swiss People’s Party (SVP) has launched an initiative to limit Switzerland’s population to 10 million which will be put to a public vote on the 14th June. In response, the Swiss Federal Council is examining further restrictions on the acquisition of Swiss real estate by foreigners, the Lex Koller. It has proposed a set of amendments and opened a public consultation on 15th April 2026.
The draft proposes amendments across a number of areas, however the primary focus of this note is the issues that may impact foreign buyers of residential and commercial (hotel) properties.
Primary residences: new authorisation requirement for third country-nationals
A main (primary) residence purchase by non-EU/EFTA nationals who reside in Switzerland under a B-permit (but not a C-permit) would be subject to authorisation which was previously not required. Moreover, this authorisation would be conditional on the purchaser reselling the property within two years if it is no longer used as a primary residence, for example on moving abroad or to a different canton or even to a different property in the same municipality. Failure to comply could result in a forced sale with any profits forfeited to the canton. Possible implications are (1) being a forced seller, even worse with a falling market and potential capital loss (2) a seller favouring Swiss or EU/EFTA purchasers who would not have to wait for authorisation to purchase.
A reduction of the quotas for holiday homes
The proposal also targets the holiday-home market by reducing the annual nationwide quota for cantonal permits from 1,500 to 750. Of these, only 600 permits would be allocated to cantons that currently allow such acquisitions, for example the cantons with the most touristic (alpine) areas. The canton that currently receives the largest quota is Valais with 330 permits. This will therefore see a dramatic reduction in its quota.
Furthemore, transfers of holiday homes between foreign owners—currently exempt from quota calculations—would once again count towards cantonal allocations, further restricting the number of properties available to non-resident purchasers.
Restrictions on the acquisition of commercial properties for pure investment purposes
Under the draft proposal foreign investors would no longer be allowed to acquire commercial properties for subsequent rental or lease without prior authorisation granted under strict conditions. Only properties acquired for their own business activities (owner-occupancy) would not be subject to authorisation. Moreover, according to the proposal, if the owner ceases to use the property for the stated business purpose, it must be sold within two years. This proposal would curtail, for example, multi-national hotel owners' or operators' activities in the country.
Next steps
The public consultation on the draft legislation will remain open until 15 July 2026. Once this process concludes, the Federal Council is expected to submit a formal bill to Parliament. At this stage, however, there is no confirmed timetable for parliamentary consideration or any eventual entry into force.
Conclusion
Many provisions remain unclear and will require further clarification, while important practical questions concerning their implementation have yet to be addressed.
At first glance these proposals do not appear entirely appropriate nor capable of resolving the problem of persistent housing shortages, which would be better addressed by more dynamic planning and permission processes. Moreover, the halving of holiday home quotas and restriction of foreign capital into hotel investment could have a negative impact on regions that rely on tourism, such as the alpine resorts. We expect significant pushback and lobbying from the real estate and hospitality sectors.
While the uncertainty persists, it may be that international investors take the opportunity to invest in Swiss real estate under the current more permissive regime, sooner rather than later.
