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Federal court on imputed rental value: Homeowners are not hardship cases

The Federal Supreme Court has lifted the hardship clause for the imputed rental value of the canton of Ticino. Deductions for low income cannot be granted. The decision should be groundbreaking for other cantons.

The imputed rental value must be at least 60 percent of the market rent – also for Ticino homeowners, says the Federal Supreme Court.

Simon Tanner / NZZ

There should be no special treatment for low-income homeowners in terms of imputed rental value. You may not benefit from a hardship clause. The Federal Supreme Court rejected a corresponding change in the cantonal tax law in Ticino. Two SP Great Councilors had lodged an appeal against a corresponding decision by the Great Council of June 1, 2021. The second public law department of the Federal Supreme Court, chaired by Florence Aubry Girardin, agreed with the complainants, as the canton of Ticino announced this week.

The verdict is still pending. Nevertheless, the decision of August 4 already has a pioneering character. “A number of other cantons have the hardship clause for the imputed rental value – they will probably have to follow suit,” comments Samuele Vorpe, head of the Center for Tax Issues at the University of Applied Sciences in Italian Switzerland (Supsi).

“Regulation copied from Graubünden”

Vorpe was extremely surprised by the verdict because the Federal Supreme Court had defended the hardship clause in the imputed rental value as a social measure in an earlier decision and because some cantons have different variants of the hardship regulation, namely Graubünden, Zurich, Obwalden, Schaffhausen, Lucerne and St. Gallen and Vaud. Depending on the relationship between imputed rental value and income, tax reductions are granted there.

“In principle, we copied the regulation of Graubünden,” says SVP Councilor Paolo Pamini, originator of the parliamentary initiative in Ticino. He, too, now expects a kind of domino effect for the cantons mentioned. The Ticino Grand Council had accepted this initiative by a large majority against the resistance of the left.

In this case, the hardship rule states that with taxable assets of less than 500,000 francs, the taxable imputed rental value may not exceed 30 percent of the cash income. This is intended to relieve the burden on homeowners who have little income but are asked to pay by the tax authorities because of a high imputed rental value. This often affects pensioners who live in their own homes.

The imputed rental value is calculated on the basis of a fictitious income that owners could earn when renting out their property. According to the Federal Supreme Court, the imputed rental value must be at least 60 percent of the market rent, and it is determined by the cantonal tax authorities.

Violation of the principle of equal treatment

SP Grand Councilor Raoul Ghisletta, as one of the two complainants, was happy about the Federal Court’s decision. “It is to be hoped that the canton of Ticino will stop plundering the public coffers under any pretext, in particular by making tax unequal treatment between owners of real estate and owners of movable assets,” he said in a statement.

Together with his colleague Carlo Lepori, he justified the complaint with a violation of the Tax Harmonization Act and a violation of the principle of equal treatment. SVP Councilor Pamini has a completely different view. “Low-income seniors who live in their own homes and are strangled by the imputed rental value can thank the socialists if they don’t receive tax breaks,” he taunts on Facebook.

Tax expert Vorpe assumes that other cantons will adapt their tax laws. However, the governments or parliaments would have to take action. It can also not be ruled out that different legislations coexist in the cantons despite the Federal Supreme Court ruling. Irrespective of the hardship regulation, the imputed rental value has been the cause of heated discussions for years. But all attempts to abolish this imputed rental value have so far failed. Parliament is currently working on new models.

BG judgment 2C_605/2021

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