Swiss Rental Income Tax: Deductions, Depreciation, and VAT

Rental income belongs on the tax return. A paid invoice, however, is not enough to establish a deduction. The analysis begins with the person who earns the income, the classification of the property as a private or business asset, the relevant federal and cantonal rules, and any lump-sum allowance that may already cover the expenditure. Those facts determine whether a cost can be deducted now, has to be divided, belongs on the balance sheet, or yields no current deduction.

Consider an inherited apartment that will be offered through Airbnb or another channel for the first time. Before the first arrival, its new owner replaces the mattresses, employs a cleaning service, installs an electronic lock, and renovates part of the kitchen. Five invoices may end up in one folder even though each calls for a different tax analysis.

The legal and administrative position described below was verified as of September 10, 2026. It is a professional overview of Swiss rental taxation and cannot replace tax, legal, or accounting advice for an individual case.

Classify the rental before calculating a deduction

Neither the marketing platform nor the number of units settles the tax classification. Ownership, the contractual role of each party, the person or company operating the accommodation, private or business asset status, the services supplied, and the organization of the activity all matter. Deal with these questions before assigning tax treatment to an invoice.

Four common situations need to be distinguished:

• Private ownership: Rental income is generally taxable income. Where the property remains a private asset, the owner may be able to choose between qualifying actual maintenance costs and a permitted lump-sum deduction. Expenditure that enhances value is not a current maintenance cost.
• Subletting: Income from a sublease must be reported. The contract, the portion used, and cantonal practice determine which rent and operating expenses can be offset. A tenant cannot simply claim the maintenance deductions available to a property owner.
• Self-employment and business assets: Costs justified by the business are examined under the rules for self-employed activity. Substantial purchases may need to be capitalized and depreciated over several accounting periods, and any private-use share must be removed.
• Corporation or limited liability company: The company is taxed on its profit. Its accounts and the applicable tax law govern capitalization, depreciation, input tax, and benefits provided for private use. Allowances intended for privately held real estate cannot be carried into the company.

Direct federal tax and cantonal and municipal taxes each have their own legal basis. For ordinary income tax, the municipality generally takes the cantonal assessment base and applies its municipal rate or multiplier. It has no separate menu of deductions from which a taxpayer may choose. This leaves distinct property taxes, tourism taxes, and fees untouched. The Federal Tax Administration publishes overviews of cantonal and municipal rates and deductions.

Before making the first accounting entry, prepare one page with the owner, contract model, private or business asset status, canton and municipality, personal-use share, rental model, VAT position, and responsible adviser. Otherwise, the records can easily confuse a private lump sum with actual expenditure or business depreciation.

Federal, Zurich, and Bern lump sums follow different rules

For privately held real estate, the Federal Ordinance on Real Estate Costs generally permits a choice, for direct federal tax, between actual costs and a lump-sum deduction. The owner makes that choice separately for each property and each tax period. If the building is no more than ten years old at the start of the tax period, the federal lump sum is 10 percent of gross rental income or gross imputed rental value. It is 20 percent for an older building. Business assets and properties used predominantly for a third party's business do not qualify for this federal allowance.

Cantonal treatment need not follow the same percentages. The Canton of Zurich, for example, allows 20 percent of annual gross rental income or imputed rental value for predominantly private-use real estate held as a private asset, whatever the building's age. Business assets and properties used mainly by third parties for business purposes are limited to actual costs. Separately billed consumption costs and periodic cleaning of common areas are excluded from the base used for the lump-sum calculation.

Consider a 12-year-old property held as a private asset that produces CHF 60,000 in gross rental income. At 20 percent, the lump-sum deduction is CHF 12,000. Assume instead that CHF 18,000 of documented expenditure qualifies under the actual-cost method. Taxable income then falls by a further CHF 6,000 compared with the lump sum. That CHF 6,000 is the additional deduction, not the tax saving. Using a combined marginal rate of 25 percent solely for illustration, the additional tax reduction would be about CHF 1,500. The true result depends on the taxpayer's income, canton, municipality, applicable schedule, and wider circumstances.

Published Bern practice contains a further rule for privately owned furnished properties. Bern’s published practice allows a deduction of 33.33 percent of gross rental income for costs associated with furnished rentals. The covered items include energy and water, furniture wear, cleaning, consumables, reception of guests, tourism levies, intermediary charges, advertising, internet, hardware and software, and collection costs. They cannot be deducted a second time as actual expenses. Bern's published approach also leaves the ordinary lump-sum allowance for the property available.

The official Bern example uses an older vacation home with an imputed rental value of CHF 12,000 and CHF 6,000 of rental income earned over three months. Nine months of personal use produce an adjusted imputed rental value of CHF 9,000. From the gross rent, 33.33 percent, equal to CHF 2,000, is deducted. Gross property income is therefore CHF 13,000, from which the example takes another 20 percent maintenance allowance of CHF 2,600. The remaining taxable property income is CHF 10,400.

Bern's 33.33 percent is a cantonal practice, not a Swiss Airbnb allowance. It cannot be adopted by an operator in Zurich, Zug, Lucerne, or another canton. Direct federal tax also calls for a separate examination of whether, and in what manner, that special cantonal practice is recognized in the case at hand.

Break down renovation costs according to the work performed

A receipt labeled “renovation” says little about deductibility under the actual-cost method. Work that preserves value maintains the existing standard. Work that leaves the property or installation in a permanently improved condition enhances value. If a project does both, its cost must be allocated. The distinction follows from Article 32 of the Federal Act on Direct Federal Tax, tax harmonization law, and the practice of the canton concerned.

An equivalent replacement for a defective kitchen may count as value-preserving maintenance. If the project also changes the layout, adds appliances, and materially raises the standard of finish, part of the expenditure enhances value. New initial equipment is not building maintenance simply because it is needed for the rental. Nor can an owner of privately held property deduct their own labor as an expense paid to a third party. Keep evidence of value-enhancing expenditure nonetheless, since it may later count as investment cost when real estate gains tax is calculated.

Ask the contractor to distinguish, in both the quotation and final invoice, between like-for-like replacement, extra equipment, labor, materials, furniture, movable appliances, and fixtures attached to the building. Photographs taken before and after the work may support the classification. Zurich's allocation guide offers reference values, while expressly requiring the particular facts of complex renovations to be reviewed.

Energy and environmental measures are an important exception under current law. According to the published Zurich practice, qualifying work on an existing building can be deductible even when it increases value. Subsidies reduce the portion eligible for deduction. A taxpayer who elects the lump sum instead of actual costs cannot add these energy and environmental costs on top. Energy-efficient windows and new insulation should therefore be checked against the special statutory category instead of being rejected solely because they add value.

Do not enter a mixed invoice as one category until a professional allocation has been made. If no breakdown exists, the tax authority may have to estimate the shares. Requiring separate lines for equivalent replacement, improvements, and new equipment at the ordering stage, and again on the final invoice, reduces that uncertainty.

Depreciation requires a genuine business asset

Depreciation allocates the loss in value of a capitalized business asset across more than one period. The asset must be classified as a business asset and properly recognized in the accounts. A bed held as a private asset is not depreciable merely because guests use it. In the books of a self-employed operator or a company, the same purchase may qualify as a business fixed asset.

Federal Tax Administration Circular A/1995 states standard depreciation rates based on book value. When original acquisition cost is used instead, each rate is halved. The following categories are particularly relevant to accommodation operators:

• Business furniture and comparable fixtures: 25 percent of book value, or 12.5 percent of acquisition cost.
• Hardware, software, office machinery, automatic control systems, and certain electronic security and testing equipment: 40 percent of book value, or 20 percent of acquisition cost.
• Tools and equipment, together with hotel tableware and hotel linens: 45 percent of book value, or 22.5 percent of acquisition cost.
• Restaurant and hotel buildings: 6 percent of book value, or 3 percent of acquisition cost, if the building is capitalized separately. Where land and building appear together in the accounts, the corresponding rates are 4 percent and 2 percent. Land itself is generally not depreciable.

These headings are tax categories, not labels that an operator may select for convenience. An electronic smart lock does not necessarily fall into one asset class simply because it uses electronics. Short bookings do not, by themselves, convert a vacation home into a hotel building. The asset’s function and use, its accounting treatment, and cantonal practice must all support the classification.

For example, assume that CHF 20,000 of furniture is capitalized. Depreciation at 25 percent of book value amounts to CHF 5,000 in the first year, CHF 3,750 in the second, and CHF 2,812.50 in the third. Using 12.5 percent of acquisition cost would generally produce CHF 2,500 each year. The timing differs, but the operator cannot combine the two methods to obtain duplicate deductions.

A special cantonal depreciation method may, under certain conditions, also be accepted for direct federal tax where it reaches the same result over a longer period. This creates neither a nationwide right to immediate deduction nor a general small-asset threshold stated in Swiss francs. An asset register should identify acquisition date and cost, asset class, depreciation method, book value, location, and disposal.

Treat the VAT questions independently

VAT classification and income or profit tax deductibility answer different questions. An expense allowed for income tax does not, for that reason alone, carry a right to deduct input tax. Conversely, VAT treatment does not decide whether the underlying invoice reduces taxable income or profit.

For an ordinary business, mandatory VAT registration generally begins at CHF 100,000 of relevant turnover from supplies in Switzerland and abroad that are not excluded from tax. The Federal Tax Administration explains which consideration counts toward the turnover threshold. Voluntary registration may be available if its conditions are met. The relevant figure is turnover as defined by VAT law, rather than every amount credited to the bank account.

A taxable lodging service, including breakfast, is currently subject to the special VAT rate of 3.8 percent for lodging services.

Position for services from 2028, checked on September 10, 2026: Current legislation limits that special rate through the end of 2027. For lodging supplied on or after January 1, 2028, verify both the continuation of the special rate and the percentage under the law then in force.

An ordinary residential lease is generally exempt from VAT. The Federal Tax Administration's industry guidance distinguishing lodging from rental makes clear that duration alone does not settle the issue. A civil-law residence or weekly residence points toward an exempt residential lease. Where the tenant is a company, its registered office or a permanent establishment lasting at least three months may be relevant. Furnishing the property therefore does not, on its own, place every rental under the 3.8 percent lodging rate.

Services purchased abroad from a platform, software supplier, or management provider need their own review. A VAT-registered person must declare certain foreign purchases. A person who is not VAT-registered can become liable for acquisition tax after purchasing more than CHF 10,000 of services subject to the place-of-recipient principle in a single calendar year. The Federal Tax Administration lists consulting, management, and data processing among its examples. Whether the rule captures a specific platform commission or software subscription depends on the contract, supplier, and place of supply.

One platform fee can thus have two different tax consequences. A lump-sum allowance may already cover it for income tax, while the same fee may still trigger an acquisition tax review for VAT. The two analyses should never be merged.

Mixed use will require more detailed records from 2029

The reform of owner-occupied residential property taxation takes effect on January 1, 2029, as set by the Federal Council. Imputed rental value and the maintenance deduction will both end for owner-occupied homes. Rental and lease income will continue to be taxed, so the ordinary deduction for maintenance costs remains for rented or leased property. The Federal Department of Finance confirms the effective date and describes the change of system.

Records for a partly owner-occupied vacation home will need to distinguish rental periods, private stays, dates blocked for personal use, and periods when the property was demonstrably available to rent. The related costs must then be allocated accordingly. The Federal Department of Finance says that the detailed allocation method for predominantly owner-occupied second homes that are also rented has yet to be clearly regulated. It mentions rental days and rental income as possible bases. Operators will need to check how the relevant canton implements the new rules before applying either approach.

Following the change, private debt interest will generally be deductible only in proportion to the value of rented or leased real estate relative to total assets. For direct federal tax, the special deduction for energy and environmental measures will cease even for rental property. Cantons may retain those deductions until no later than 2050. The Federal Department of Finance summarizes these effects for private landlords. A canton may also introduce a special property tax for second homes that are predominantly owner-occupied.

Owners of mixed-use property should start now rather than wait until 2029. Keep an accurate occupancy calendar, evidence of blocked dates, rental agreements, proof of payment, and costs assigned to the individual property. A year-end description consisting only of “partly rented” will offer little basis for a future allocation.

Build a tax file that connects each amount to its purpose

Before choosing a percentage, make every material item of income and expense traceable. The file should capture:

• the property and individual unit concerned;
• the relevant owner, tenant, or company;
• whether the property is a private or business asset;
• the rental period, personal use, vacancy, and period of service;
• the contracting party, invoice date, payment, currency, and service description;
• the shares that preserve value, enhance value, or constitute initial equipment;
• whether the amount is a current expense or a capitalized asset;
• the choice between lump-sum and actual costs for each tax period;
• the canton, municipality, and tax level concerned;
• VAT status, any foreign supplier, and possible acquisition tax; and
• subsidies, insurance proceeds, credits, and cost contributions.

A renovation file should also contain the quotation, an itemized final invoice, a description of the work, photographs from before and after, and payment evidence. Maintain a separate asset register for fixed assets. Oprivia's Vacation Rental Audit Trails: Making Evidence Traceable explains how photographs, timestamps, and later corrections can remain intelligible in their original context. Where cleaners, technicians, or other vendors perform the work, Vacation Rental Vendors: From Work Order to Verified Release describes the operational record.

Oprivia neither calculates tax nor keeps tax accounts or decides deductibility. Within its released and agreed scope, it may associate operational tasks, service and damage cases, responsibilities, and evidence with a property or stay. Whether those records assist the accountant or tax adviser depends on their substance, quality, and the agreed handoff. Operational documentation alone may fall short of the accounting or tax evidence required. The final treatment must follow the applicable rules, supported by advice from a qualified tax professional where appropriate.

Questions that arise in practice

Can the full cost of a renovation be deducted?

Only the portion that qualifies under the applicable practice as value-preserving maintenance or a legally equivalent measure and meets all other requirements can be deducted. Improvements that enhance value, initial equipment, and work performed by the owner need separate treatment.

Is Bern's 33.33 percent deduction available throughout Switzerland?

No. The percentage comes from Bern's published practice for privately owned furnished property. Direct federal tax and every other canton require their own analysis.

May all furniture be depreciated?

No. Only a capitalized business asset can be depreciated. In a privately owned furnished rental, the applicable cantonal lump sum may already cover wear on the furniture.

Is every furnished rental taxed at the 3.8 percent VAT rate?

No. The special rate concerns lodging supplied by a taxable person. Whether the arrangement is lodging or an exempt residential lease depends on the facts, rather than furnishing or the stated length of the contract alone.

Which costs remain deductible for rented property from 2029?

Ordinary maintenance generally remains deductible for rented or leased real estate. The reform introduces new limits involving personal use, private debt interest, and energy and environmental measures. For mixed-use property, the outcome will depend on documented allocation and the cantonal practice that develops.

Before calculating anything, record on one page the owner, the person operating the rental, the party who incurred each cost, the way the property is used, the potentially relevant lump sum, and the canton with jurisdiction. Getting that classification right prevents more mistakes than focusing on a percentage in isolation. The receipts, depreciation schedule, and VAT issues can then be sent to the accountant or tax adviser in a form that can actually be reviewed.