Abolition of the imputed rental value and simultaneous "quasi abolition" of the debt interest deduction
On September 28, 2025, a vote will be held on the abolition of the imputed rental value. However, the well-intentioned proposal contains a significant tax system error that has hardly been addressed in the discussions to date. Secondly, the abolition of the imputed rental value would also mean the general elimination of the debt interest deduction, as in future this can only be deducted in proportion to the amount of immovable assets rented out in relation to total assets.
As a result, anyone who does not own any privately rented properties will no longer be able to deduct debt interest. However, even those who own rented properties can only claim the debt interest deduction to a (in some cases greatly) reduced extent due to the proposed pro rata allocation. This is particularly the case if there are also significant other assets (e.g. securities or investments).
This means that not only property owners are affected by the planned change, but everyone. The virtual abolition of the debt interest deduction therefore not only affects so-called consumer credit, but also various other situations that are frequently encountered in the SME sector in particular.
The following examples are intended to illustrate, in a non-exhaustive form, the new inconsistencies that the abolition of the imputed rental value (or the resulting reduction/quasi-abolition of the debt interest deduction) entails. Assumption: A is a homeowner but does not rent out any property.
Example 1: A receives an interest-bearing loan from his friend B for several years. B must pay tax on the interest income (as before) - A can no longer deduct the debt interest (new).
Example 2: A (owner of a commercial business or a real estate company, A-AG) receives a shareholder loan from his company, which bears interest according to the rules. A-AG must pay tax on the interest income (as before) - A can no longer (now) deduct the debt interest.
Example 3: A has acquired an IT company, B-AG, and financed this purchase partly with his own funds and partly with a bank loan. The bank must tax the interest income (as before) on the bank loan - A can no longer deduct the debt interest (new).
In addition to the examples mentioned, the new regulation naturally also applies to the usual interest on consumer loans as well as interest on arrears, which is incurred for late tax payments, for example.
In future, interest could therefore no longer be tax-deductible for the debtor, but would still have to be taxed for the recipient. This is hardly comprehensible from a tax system perspective and leaves an extremely bland aftertaste among tax system experts and undoubtedly also among taxpayers for a proposal that is actually well-intentioned.