Tax glossary
Debt interest (Schuldzinsen)
Debt interest is the interest you pay on private debts such as mortgages or loans — it is deductible up to the amount of your investment income plus CHF 50,000.
If you owe money privately and pay interest on it, you can deduct that interest from your taxable income. By far the most important case is mortgage interest on your home, but interest on personal loans, loans from relatives or a Lombard loan is also deductible.
The deduction is capped. Private debt interest is deductible up to the amount of your gross income from private assets — imputed rental value, rental income, interest and dividends — plus a further CHF 50,000. This rule applies in the Canton of Zurich and for direct federal tax. For most homeowners the cap is irrelevant in practice, but it prevents heavily leveraged investment strategies from being over-subsidised by the tax system.
Repayments of the debt itself (amortisation) and leasing instalments are not debt interest. Nor is interest on a construction loan up to the date you move into a newly built home — it counts as part of the investment cost. For the self-employed, business interest is dealt with in the profit and loss account, not here.
Deductible and non-deductible interest
What matters is that a genuine debt exists and the interest was paid or fell due during the tax year.
- Deductible: mortgage interest on owner-occupied and rented property
- Deductible: interest on personal loans, including loans between relatives with a written agreement
- Building-lease interest (Baurechtszins): deductible, but in Zurich under property maintenance rather than debt interest
- Not deductible: amortisation and leasing instalments
- Not deductible: construction loan interest during the building phase of your home
The schedule of debts
Debts and interest are listed in the schedule of debts (Schuldenverzeichnis) in your tax return — with the lender, the debt outstanding on 31 December and the interest paid. The debts also reduce your taxable wealth. For loans between private individuals, the tax office asks for the lender's name and address; the lender in turn must declare the loan and the interest income.
What the abolition of imputed rent changes
Under the reform approved by voters in September 2025, the imputed rental value (Eigenmietwert) on owner-occupied homes will be abolished. The Federal Council has set the reform to take effect on 1 January 2029. At the same time, the deduction for private debt interest largely disappears: interest remains deductible only in proportion to rented or leased property relative to total assets. First-time buyers get a temporary, limited deduction.
Until the end of 2028, the current rules continue to apply. If you have a mortgage, it is worth aligning your amortisation strategy and fixed-rate terms with the change in good time.
- Up to tax period 2028: imputed rent taxable, debt interest deductible within the cap
- From 2029: no imputed rent, debt interest deductible only proportionally for investment property
- First-time buyers: temporary deduction for the first years after purchase
Example: a family home in Winterthur-Hegi
A family owns a house in Winterthur-Hegi with an imputed rental value of CHF 26,000. The mortgage is CHF 700,000 at an average rate of 1.6 percent — CHF 11,200 in mortgage interest. They also have a car loan with CHF 600 interest.
The cap is investment income (imputed rent CHF 26,000 plus CHF 200 bank interest) plus CHF 50,000 = CHF 76,200. Their debt interest of CHF 11,800 is well below this and fully deductible. Their annual amortisation of CHF 10,000, however, is not deductible — it only reduces the debt and therefore future interest.
Frequently asked questions: Debt interest (Schuldzinsen)
Can I deduct interest on a loan from my parents?
Yes, if there is a written loan agreement, the interest is actually paid and the rate is in line with the market. Your parents must declare the loan as an asset and the interest as income.
Is it worth keeping a high mortgage for the tax deduction?
Only to a limited extent. Every franc of interest costs you a franc and saves only your marginal rate. What is more, the deduction largely disappears with the abolition of imputed rent from 2029. Indirect amortisation via pillar 3a can be a sensible alternative.
Is credit card interest deductible?
In principle yes, as private debt interest — provided you can document it with a statement. The amounts are usually small but should still be listed in the schedule of debts.
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