If you have work done on your property, sooner or later you will ask yourself: can I deduct this from my taxes? The answer depends mainly on one distinction — whether the work preserves the value of the property (werterhaltend) or increases it (wertvermehrend). This article summarises the rules for property held as private assets in the canton of Zurich, based on the guidance published by the Kantonales Steueramt Zürich (the cantonal tax office) and the federal Liegenschaftskostenverordnung (ordinance on deductible property costs). It also explains what changes with the abolition of the imputed rental value (Eigenmietwert). As a building company, we do not give tax advice; we show what matters and what a quote should look like to be useful for tax purposes.
Value-preserving or value-enhancing
Maintenance costs are deductible: expenses that preserve or restore the existing condition, such as a new coat of paint, replacing a faulty water heater with an equivalent appliance, repairing a leaking pipe, or new tiles in place of damaged ones. Expenses that permanently increase the value of the property are not deductible from income tax: an extension, an additional bathroom, or fittings that go well beyond what was there before. These value-enhancing costs are not lost, however — they count as investment costs (Anlagekosten) and are taken into account in the property gains tax (Grundstückgewinnsteuer) when you later sell. You should therefore keep the receipts for them just as carefully.
An important point from the information sheet (Merkblatt) issued by the Kantonales Steueramt Zürich on the deductibility of costs for the maintenance and management of property (Zürcher Steuerbuch Nr. 30.3): the comparison is not with the value of the whole property, but with the specific installation being replaced. If a basic kitchen is replaced by a much better-equipped one, the part that goes beyond replacing what was there before is value-enhancing — even if the property as a whole is not noticeably worth more as a result.
Mixed work: splitting the costs
Most renovations involve both. A bathroom renovation replaces old sanitary fixtures and tiles (maintenance), but may also add a second shower or a higher-standard level-access shower (value enhancement). In that case, only the maintenance share is deductible. The split is estimated; the cantonal tax office's information sheet contains a catalogue with guide values for typical work to help draw the line. To assess the work, the tax office requires precise details of the work carried out and of the condition before and after.
This is exactly where a well-structured quote helps. If each piece of work appears as a separate item with quantity and rate, and materials are shown separately, it is clear which part is replacement and which part is improvement. An invoice with a single line reading ‘Bathroom renovation, lump sum’, on the other hand, makes the split difficult. Our quotes and invoices are itemised line by line, with labour and materials separate; on request, we also break them down by room.
Energy saving and environmental protection
Investments that serve energy saving and environmental protection are treated in the same way as maintenance costs — even if they would otherwise be value-enhancing. The federal Liegenschaftskostenverordnung (SR 642.116) defines them as measures that contribute to the rational use of energy or to the use of renewable energy, where outdated building components or installations are replaced, or new ones are fitted for the first time, in existing buildings. Typical examples are thermal insulation, replacement windows with better ratings, or replacing a fossil-fuel heating system. If such measures are subsidised by the public sector, only the costs you bear yourself are deductible. If the costs cannot be taken into account in full in the year they are incurred, the remainder can be carried forward to the next two tax periods.
Demolition costs for a replacement building
If a residential building is demolished and replaced on the same plot by a new building with a similar use, the demolition costs (Rückbaukosten) are deductible: dismantling of installations, demolition, removal and disposal. Not deductible are, among other things, remediation of contaminated sites, earthworks that reshape the terrain, tree clearing, levelling and excavation. The replacement building must be built by the same taxpayer, and the deductible costs must be shown in a separate statement, broken down into dismantling, demolition, removal and disposal. Here, too, the costs can be carried forward to the next two tax periods. For a demolition job, this means in practice: the quote should show these four categories separately from the outset, together with the disposal receipts.
Flat-rate deduction or actual costs
Instead of the actual costs, owners can claim a flat-rate deduction (Pauschalabzug). Here the canton and the federal government differ:
- Cantonal and municipal taxes (Staats- und Gemeindesteuern), canton of Zurich: Under the ruling of the cantonal finance directorate, the Finanzdirektion (Zürcher Steuerbuch Nr. 30.2), the flat rate is 20% of the gross rental income or of the rental value — regardless of the age of the building.
- Direct federal tax (direkte Bundessteuer): Under the Liegenschaftskostenverordnung, the flat rate is 10% of the gross rental income or of the gross imputed rental value if the building is up to ten years old at the start of the tax period, and 20% if it is more than ten years old.
You can choose afresh for each tax period and for each property whether to deduct the flat rate or the actual costs. This gives a basic rule: in years without major work, the flat rate is usually the simpler choice; in years with a larger renovation, deducting the actual costs pays off, provided they exceed the flat rate. If you carry costs for energy-saving measures or demolition forward to a later period, you cannot claim the flat-rate deduction in that period. For properties used mainly for business purposes by third parties, the flat rate is not available.
Because the choice is made anew each year, it can make sense to plan larger works so that they are concentrated in one tax year, rather than spread over two years in each of which they stay just below the flat rate. Whether and how this works out in your case, and which tax year a particular invoice counts towards, is best clarified with your tax adviser or the tax office before work begins.
Which documents you need
- Quotes and invoices with each piece of work listed individually, not just lump sums
- Labour and materials shown separately, so that replacement and improvement can be told apart
- A description of the condition before and after, with photos for larger works
- For demolition ahead of a replacement building: a separate statement broken down into dismantling, demolition, removal and disposal
- For energy-saving measures: details of any subsidies
- Proof of payment
What changes with the abolition of the imputed rental value
On 28 September 2025, the Swiss people and cantons approved the proposal to abolish the imputed rental value. According to a press release from the Federal Tax Administration (ESTV) dated 1 April 2026, the Federal Council has set 1 January 2029 as the date on which the new rules come into force. Until the end of 2028, the current rules apply: the imputed rental value is taxed, and maintenance costs are deductible as described above.
From 1 January 2029, for owner-occupied residential property, the deduction for maintenance costs will be abolished along with the imputed rental value — at federal, cantonal and municipal level. According to the ESTV, the cantons may retain deductions for investments in energy saving and environmental protection for a limited period; whether and for how long the canton of Zurich will make use of this had not been finally decided at the time of writing. For rented-out properties, maintenance costs will remain deductible, according to cantonal tax authorities. The implementing provisions are currently being drawn up by the federal government and the cantons; some questions of interpretation are still open.
For owner-occupiers, this means: work that is carried out and invoiced by the end of 2028 still falls under the current law. Whether it is worth bringing planned work forward for this reason depends on your personal tax situation, and it should not be the only reason for setting a date — a renovation that is not yet needed from a building point of view does not become cheaper than no renovation at all just because of a tax deduction. What can be foreseen, however, is that building firms may be in greater demand in 2027 and 2028. If you are planning larger works, enquire early.
How we can help
We carry out maintenance and renovation work in all trades — renovation, plumbing, tiles and floors, remodelling and drywall, strip-out and dismantling, painting — and provide quotes and invoices that are suitable for your tax return: item by item, labour and materials separate, broken down by room on request. The tax assessment itself is a matter for the tax office and your tax adviser.
This article is not a substitute for tax advice. It reflects the position as of September 2026 and is based on the information sheet of the Kantonales Steueramt Zürich on the tax deductibility of costs for the maintenance and management of property (ZStB Nr. 30.3), the ruling of the Finanzdirektion on flat-rate deductions (ZStB Nr. 30.2), the federal Liegenschaftskostenverordnung (SR 642.116) and the ESTV press release of 1 April 2026. The assessment by the competent tax office is authoritative. For your personal situation, please contact a tax adviser or the Kantonales Steueramt Zürich.