Geneva and Vaud: the tax timetable for renovations

Property owners in Geneva and the canton of Vaud are set to face two overlapping changes: the announced tightening of energy efficiency requirements from January 2027, followed by the tax reform linked to the abolition of the notional rental value in 2029. For an owner-occupier, a family-run property company, a self-employed person who owns their premises, or an SME housed in its own building, the issue is no longer merely technical. It has become a matter of budget, tax and asset management.

This issue warrants careful planning without rushing into decisions. Energy-efficiency works need to be planned, financed, documented and declared. However, depending on the nature of the expenditure, its tax treatment may vary: routine maintenance, energy-efficiency refurbishment, conversion, sustainable improvements to the property or capital expenditure to be capitalised in the accounts. It is precisely in this grey area that the role of a trust company becomes crucial.

2027 marks the start of a new phase for energy-inefficient buildings

In Geneva, the requirements do not relate to a new target, but to the threshold above which a building may be subject to mandatory works. The energy consumption target remains set at 450 megajoules per square metre per year. However, the trigger threshold, currently set at 800 MJ/m² per year, is due to fall to 650 in 2027, then to 550 in 2031, according to details reported by econostrum.info based on information from the Tribune de Genève.

In practical terms, the gradual lowering of the threshold broadens the scope of buildings affected. A building that is currently exempt from the requirement could fall within the scope of the requirements at a later stage. For a property owner, this changes the way an energy performance certificate is interpreted: it is no longer simply a matter of knowing whether the property is energy-efficient or not, but of assessing when it is likely to become an administrative issue.

In the canton of Vaud, the new requirements announced are aimed in particular at the refurbishment of the largest, most energy-intensive buildings. The replacement of fossil-fuel heating systems reaching the end of their service life will, with some exceptions, have to be carried out using a system that utilises renewable energy. The timetable cited sets a maximum deadline of 2047. This long-term outlook must not obscure the immediate challenge: an old boiler, a roof reaching the end of its service life or poor thermal insulation may create a need for funding well before the final deadline.

In both cantons, major roof renovation also entails an obligation to install solar panels on suitable surfaces. This requirement can transform a project originally planned as a simple refurbishment into a larger-scale undertaking, involving additional costs, technical coordination and tax implications that need to be analysed.

The end of the rental value changes the tax calculation

The second deadline relates to taxation. According to information reported by econostrum.info, maintenance costs will remain deductible from taxable income until the end of 2028 for owners who live in their own homes. From 2029, with the abolition of the rental value, this deduction will cease to apply to owner-occupied properties. Mortgage interest will also no longer be deductible, subject to certain exceptions.

The notional rental value generally corresponds to a notional taxable income attributed to a homeowner who lives in their own property. The idea is to take account of the economic benefit of living in one’s own property. In return, the current system generally allows for certain deductions, notably maintenance costs and mortgage interest, subject to the applicable rules. When this mechanism is abolished, the tax balance shifts: there will be less notional taxable income, but also fewer deductions.

For owner-occupiers, the trade-off becomes a delicate one. Bringing forward certain maintenance works before the end of 2028 may seem fiscally advantageous, provided these expenses do indeed meet the conditions for deduction. However, it is not enough for an invoice to relate to a property for it to be tax-deductible. In principle, a maintenance expense is intended to preserve the value or use of the property, whereas an improvement or conversion may be treated differently. The classification depends on the facts, supporting documentation, the nature of the work and the applicable tax practice.

Energy-saving investments are also affected by the change. According to the source provided, they will lose their deductibility at federal level with the abolition of the imputed rental value, whilst the cantons will be able to retain this benefit until 2050. In French-speaking Switzerland, only Fribourg has so far announced its intention to do so, according to the article. This cantonal uncertainty means that a budget should not be based solely on assumed tax savings.

For SME owners, the issue goes beyond personal tax returns

Public debate often focuses on owner-occupiers of a villa or flat. But the practical consequences extend beyond this. An SME that owns its business premises, a property company, a self-employed person who owns their premises, or an entrepreneur who lets to their own company must analyse the works from several angles simultaneously: direct taxation, accounting, cash flow, bank financing, potential VAT, internal rents and borrowing capacity.

In accounting, a routine repair expense is not treated in the same way as an investment that extends the life of a building, increases its value or sustainably improves its performance. In one case, the expense may be charged immediately to the profit and loss account. In the other, it may need to be capitalised on the balance sheet and depreciated in accordance with the applicable rules. The distinction is not always clear-cut, particularly when the project involves replacing worn-out components, bringing the property up to energy efficiency standards and improving comfort.

For an SME, the impact on cash flow is often greater than the tax impact. Government grants, where available, must be factored in with caution. Nicole Waelti-Ansermot, head of wealth management at BCV, quoted in the source article, points out that such grants are generally paid out after the work has been completed. The business or property owner must therefore first cover the instalments, invoices and unforeseen costs. A cash flow plan that accounts for a grant too early can create unnecessary strain.

Bank financing must also be planned for in advance. The solutions mentioned in the source include equity, increasing a mortgage or, subject to certain conditions, an early withdrawal from the second or third pillar. For businesses, the analysis will focus more on borrowing capacity, available collateral, the impact on any covenants and the alignment between the term of the financing and the useful life of the property. According to the article, some banks also offer green mortgages at preferential rates to finance energy-efficiency works. Here too, the terms and conditions must be examined before signing a quote.

Do not confuse energy urgency with tax haste

The risk in the coming months will be to confuse everything: future cantonal obligations, tax opportunities before 2029, contractors’ quotes, grants, mortgage financing and wealth management strategy. Yet sound decision-making begins with a precise assessment. What is the actual condition of the building? Which components will need to be replaced in any case? Does the planned project fall under routine maintenance, energy retrofitting, an upgrade or a conversion? Are the works required by a standard, recommended by an assessment or simply desired to improve comfort?

Boris Clivaz, director at GefiSwiss and co-founder of Steen Sustainable Energy, quoted by econostrum.info, sums up the key concern: deadlines are being imposed on property owners, but whether they can afford the work remains the real question. For an SME, this affordability is not limited to the total cost of the project. It depends on the timing of payments, any potential loss of business during the works, a possible increase in financial costs, and the ability to pass on or absorb these costs.

In this context, the recommendation put forward by Nicole Waelti-Ansermot leans towards caution: start by assessing whether the renovation is genuinely necessary and, where a trade-off is required, prioritise routine maintenance. The reasoning is understandable: these costs could lose their tax-deductibility for owner-occupiers after 2028, whilst energy-efficiency investments could, depending on cantonal decisions, retain this benefit for longer. However, this interpretation must be assessed on a case-by-case basis, as the treatment will depend on the canton, the nature of the property and the owner’s status.

For a property management firm, the best course of action is to compile a decision-making dossier before work begins. This should include diagnostic reports, detailed quotations, a breakdown by work item, administrative decisions, grant applications, an invoicing schedule and a tax simulation. This documentation facilitates discussions with the tax authorities, the bank and the company’s governing bodies. It also reduces the risk of discovering too late that an item considered deductible is not, or that an investment should have been capitalised.

A timetable to be incorporated into the 2026 budgets

The deadlines in 2027 and 2029 may seem close or far off, depending on the condition of the building. In practice, a property development project takes time: energy audits, technical decisions, any necessary permits, requests for quotations, financing, coordination of trades and planning for service interruptions. For a business, these stages must be factored into the budget cycle well before the invoice arrives.

Property owners in Geneva and the canton of Vaud would therefore be well advised to avoid two opposing tendencies: postponing any consideration until a formal deadline is imposed, or commencing works solely to achieve a short-term tax benefit. The correct approach is more nuanced. It involves prioritising the necessary works, distinguishing between maintenance expenditure and capital expenditure, checking the applicable tax rules, and securing funding whilst taking into account the delayed payment of public grants.

The announced abolition of the rental value is radically altering the tax dynamics of owner-occupied property, whilst energy efficiency requirements are increasing the pressure on the least energy-efficient buildings. For self-employed individuals and SMEs that own their premises, the challenge is not merely to renovate: it is to choose the right timing, the right method of financing and the correct accounting and tax treatment. Decisions taken before 2029 could have a lasting impact on cash flow and the balance sheet.