How did becoming an owner make you save money? What about in 2025 ?

Introduction

“Oooh, you don’t know, Noé, I heard again this morning that becoming a homeowner would save us taxes… Is that really true?”

To answer this question, let me start from the beginning. Back then, my wife Zoé and I lived in an 80m2 apartment in the center of Lausanne. Our rent was 2,200 CHF. The building wasn’t anything special, in fact, it was quite old. But, in the property market, the apartment was worth the modest sum of 800,000 CHF.

The owner of our property is making an annual return of (2,200 CHF x 12 / 800,000 CHF x 100) = 3.3%!

We thought that if we could rent such a valuable property, we must be solvent enough to buy one of the same value. Except we wanted something new. After some research, we found a rare gem at the edge of the city, in the charming commune of Chalet-à-Gobet.

Without hesitation, we gathered the usual paperwork and presented it to our banker. He quickly confirmed that the bank agreed to lend us the necessary amount, with a fixed interest rate of 1.2%.

(A small aside for our loyal readers: as every year, we update our articles to provide you with up-to-date information suited to the changes in the real estate market. Interest rates have fluctuated significantly in recent years: they were extremely low during the COVID period, surged in 2022-2023, and then started a significant decline in late 2024, early 2025. Today, 10-year rates are again hovering around their historical lows, around 1.2%.)

End of this aside, now back to our story: This little gem of an apartment at the foot of a brand-new building cost us 770,000 CHF, including a parking space. Our personal contribution, representing the 20% of own funds required, amounted to 154,000 CHF. The mortgage was 616,000 CHF, divided into two tranches.

Buying your primary residence to save on rent

In this chapter, we will analyze the economic expenses of a tenant and compare them with the costs that an owner would have to pay monthly.

Monthly expenses for a tenant

This point is relatively simple: the rent is usually the only fixed monthly expense for a tenant. In our example, the rent amounts to CHF 2,200 per month, a sum that covers the use of the property but generates no equity for the tenant.

Monthly expenses for an owner

Things become more complex when it comes to an owner. For this first analysis, we will focus solely on the “equivalent rent” for an owner, which mainly consists of interest paid on the mortgage debt and amortization.

In our example:

• The owner borrows CHF 616,000.
• The annual interest rate is 1.2%, which amounts to CHF 7,392 per year, or about CHF 616 per month in interest.

Additionally:

• Amortization: the portion of the capital repayment (usually on the first rank). This amount gradually reduces the debt and increases the owner’s equity in the property.

In summary, an owner pays more complex monthly payments, but these include a forced savings component, unlike a tenant’s rent.

Buying your primary residence to save on taxes

Before concluding that purchasing a primary residence is advantageous, it is essential to consider the tax impacts. In Switzerland, buying real estate brings significant changes to your tax declaration, both in terms of income and wealth.

Tax impacts of purchasing a primary residence on income

In Switzerland, we have a unique and often debated tax mechanism: the imputed rental value.

What is the imputed rental value?

The imputed rental value is a fictitious income added to the taxable income of the owner of a property used as their primary residence (as opposed to a property rented to others).

• It is calculated in most cantons based on the habitable square meters and can vary depending on the location and condition of the property.

Possible tax deductions for owners

In return for this fictitious income, several deductions are allowed:

1. Property tax: A fixed annual tax paid by the owner.
2. Maintenance costs: Expenses for maintaining the property can be deducted. If no expenses have been incurred, most cantons allow a flat-rate annual deduction.
3. Condominium fees: Expenses related to the maintenance of common areas in a co-owned building are also deductible.
4. Mortgage interest: In our example, the 1.2% annual interest on a debt of CHF 616,000 is deductible.

To determine whether buying a primary residence will lower or increase your annual taxes, you need to compare:

• Imputed rental value vs allowable deductions.

Here are the two possible scenarios:

1. If the imputed rental value is higher than the deductions, your annual taxes will increase.
2. If the imputed rental value is lower than the deductions, your annual taxes will decrease.

It’s that simple! Let’s now explore this concept with concrete numbers.

With the assumptions made, this purchase would reduce our taxable income by nearly CHF 5,000 each year, resulting in a proportional decrease in our taxes.

Tax savings example

As you know, income tax rates in Switzerland vary significantly depending on your income, ranging from 0% to 42%. This makes it impossible to provide a precise estimate without knowing your situation. However, here is a concrete example:

• Annual income: CHF 90,000.
• Applicable tax rate: 21% (CHF 19,200 in annual taxes).
• Reduction in taxable income: CHF 5,000.
• Tax savings: 21% x CHF 5,000 = CHF 1,050.

Therefore, this real estate purchase provides a tangible reduction in taxes due to the decrease in taxable income.

Before drawing final conclusions, it is essential to examine the impact of this purchase on wealth tax. Once this analysis is completed, we will have a comprehensive view to assess whether this real estate purchase is truly advantageous in all aspects.

Tax impacts of purchasing a primary residence on your wealth

The impact of wealth tax when purchasing real estate is generally much easier to understand than that on income. As a general rule, purchasing real estate leads to a decrease in your taxable wealth, and therefore a reduction in your wealth taxes.

Why does your taxable wealth decrease?

The tax authorities do not use the actual purchase price to assess your property, but a fiscal value, which is often much lower than the price paid.

• Geneva: The fiscal value may be close to the purchase price in the first few years.
• Valais: The fiscal value is generally estimated to be 40% less than the purchase price.

Additionally, since the mortgage debt often represents 80% of the purchase price, and the fiscal value is lower than these 80%, your taxable wealth decreases.

Conclusion on wealth tax

Buying a primary residence almost always lowers your taxable wealth, and by extension, your wealth taxes. However, it is important to note that this tax remains relatively low in Switzerland, except for holders of very large estates.

Tax and budgetary savings of a real estate purchase

We are now at the end of this article. To conclude, let’s summarize the key points for a clear synthesis:

• Tenant: Their only fixed expense is the rent.
• Owner: In addition to the mortgage payments, they benefit from significant tax variations, both on income and wealth.

Here is a concrete example for 2025:

• Property: Primary residence at Chalet-à-Gobet.
• Purchase price: CHF 700,000.
• Monthly expenses for the owner: Mortgage interest (1.2%), amortization, charges, and tax variations.

In conclusion, a real estate purchase represents an investment with favorable tax impacts, notably a reduction in wealth taxes and, potentially, savings on income taxes.

We can see that, in this example, the annual budget for a property owner would amount to CHF 20,454, compared to CHF 26,400 for a tenant (CHF 2,200 x 12 months). This represents a significant annual saving of CHF 5,946 in favor of the property owner, not to mention the building of real estate wealth.

Before moving on to how FBKConseils can support you in your real estate project, it is important to remind you that this article is based on several assumptions. The conclusions drawn here could vary significantly depending on market conditions or your personal situation. If this article is updated next year, the results might be radically different.

The rise in interest rates

At the end of 2024 and the beginning of 2025, things are looking positive for borrowers: banks are once again offering rates close to 1% for 10 years, making real estate purchases very attractive.

However, if the economic situation changes and interest rates rise, the savings made by a property owner could be significantly reduced. Caution is therefore advisable when evaluating a real estate project.

Flat-rate maintenance costs

In this example, we used a flat-rate of 30% of the rental value, in accordance with what some tax authorities accept. However, the reality can be quite different:

• New property: Maintenance costs could be much lower.
• Old property: Maintenance costs can increase significantly, or even skyrocket in the case of major renovations.

These variations should be taken into account in your calculations.

Changes to the tax on rental value

For the past 30 years, and more intensely at the end of 2024, there has been a debate in Switzerland: the abolition of rental value tax. If this law were to pass, it could lead to:

1. The disappearance of the fictional taxable income for property owners.
2. The removal of deductions for maintenance costs and, to some extent, for mortgage interest.

These changes could significantly alter the profitability calculations related to buying property, even for a primary residence.

Notary fees and transfer taxes

In our example, we assumed that the purchase price included all fees. However, in reality, a real estate transaction in Switzerland involves specific taxes, notably:

• Notary fees and transfer taxes, which vary by canton.
• These costs typically represent 4% to 5% of the property price (can vary greatly depending on the canton).

For a property priced at CHF 700,000, this could reach up to CHF 35,000, an amount that must be included in your calculations.

Other factors to consider

Finally, there are many other elements that can influence the profitability or interest of a real estate purchase:

• Appreciation or depreciation of the property: Your property could gain or lose value over the years.
• Capital gains tax: Payable upon sale, this tax can significantly reduce your profit.
• Mortgage penalties: In the case of early sale, fees may apply if the mortgage contract is not honored.
• And much more.

Conclusion

Every real estate project is unique and depends on many personal and financial factors. Therefore, it is impossible to answer universally the question: Is investing in a primary residence a good idea?

The purpose of this article is to provide you with the maximum information to better understand the issues and simulate the impacts. A thorough analysis of your situation remains the key to making an informed decision.

How can FBKConseils assist with your real estate project?

An initial introduction meeting

At FBKConseils, we always offer a free initial meeting in 2025. In twenty minutes, we take the time to discover your project, understand your needs, and answer your main questions. Book your slot now, either via video conference or in our Lausanne office.

A consultation meeting

Sometimes, twenty minutes isn’t enough to cover everything. At FBKConseils, we offer longer meetings to explore your real estate project in detail, conduct thorough research, and provide you with precise simulations.

Fiscal and budget simulations

Don’t have time for calculations? FBKConseils handles your fiscal and budget simulations. We provide you with a comprehensive, detailed analysis to help you negotiate and finalize your project with peace of mind.

Administrative procedures

A real estate purchase doesn’t stop at calculations. At FBKConseils, we support you through all the administrative steps, from project analysis to final signing and organizing your move.