Quick answer: As a property owner, you can deduct mortgage interest, maintenance costs, and energy-efficient renovations from your taxes. With smart planning, you can save several thousand francs every year.
The problem
You bought your own home and are thrilled. Then the first tax return arrives. Suddenly, you have to declare the imputed rental value as income. That feels unfair. But there is good news: as a homeowner, you also have many deduction options.
Can I deduct mortgage interest?
Yes, in full. You deduct the interest on your mortgage directly from your taxable income. This applies to federal tax as well as cantonal and municipal taxes.
With low interest rates, a deliberate strategy can pay off. Instead of fully repaying the mortgage, you invest the free capital elsewhere. This way, you keep the tax deduction while also generating a return.
Which maintenance costs can I deduct?
All value-preserving work is deductible. This includes:
- Repairs to the roof, facade, or heating system
- Painting and new floor coverings
- Replacement of kitchen or bathroom, provided it is of equivalent standard
- Garden maintenance for rental properties
Important: Value-enhancing investments such as an extension or a pool cannot be deducted. However, they increase the acquisition costs for a future sale. So keep all receipts.
Why should I spread renovations over multiple years?
This is one of the best tax tips of all. If you carry out a major renovation in a single year, the deduction may go to waste. Your taxable income might already be at zero.
Instead, spread the work over two or three tax years. This way, you make optimal use of the deductions. The St. Gallen tax office accepts this, as long as the work actually takes place in the respective years.
Flat-rate deduction or actual costs -- which is more worthwhile?
You can choose anew each year. In the canton of St. Gallen, the following applies:
- Flat-rate deduction: 20% of the imputed rental value for buildings under 10 years old, otherwise 10%.
- Actual costs: All maintenance costs actually incurred, with receipts.
In quiet years without major repairs, the flat rate is often more favorable. In years with a new heating system or window replacement, actual costs are the better choice.
What is the imputed rental value all about?
As a homeowner, you must declare the imputed rental value as income. The canton of St. Gallen sets it at 60 to 70% of the market rent. That sounds annoying. But in return, you can deduct mortgage interest and maintenance costs -- something tenants cannot do.
Expert tip from Sandro: Keep a renovation diary. Note every repair with the date and cost. This way, you will not miss any deductions on your tax return and will have everything ready if the tax office has questions.
Conclusion
With the right planning, property owners can noticeably reduce their tax bill. Staggering renovations and the annual choice between flat-rate and actual costs make a real difference. Planning an energy-efficient renovation? Then also read our article on subsidies and tax deductions. At Rüttimann Vision, we are happy to support you with your tax return.