Which works on a property are considered maintenance-related and which are considered value-enhancing?

Tax decisions: Understanding and using the difference

The basis: What is pure value preservation?

Before we delve into complex, value-enhancing renovations , we need to define value maintenance. Maintenance encompasses everything that ensures the functionality of your property without raising its standard. You repair what's broken or replace old parts with equivalent ones. Typical examples include... Examples are :

• Painting work on the facade or in interior spaces.
• repair one defective Heating pump .
• Replacement of a broken refrigerator with a model of the same class.
• Gardening work that serves purely maintenance purposes (mowing the lawn, trimming hedges).

These costs directly reduce your taxable income. They are the opposite of value-enhancing renovations , as they do not create new value but rather protect existing value.

The definition: What are value-enhancing renovations?

Value-enhancing renovations occur when you increase the value of the property beyond its original condition through structural measures. You create Added value . Classic value-enhancing Renovations are :

• Construction of a conservatory where previously there was only a terrace.
• Conversion of the attic into living space.
• First-time installation of a sauna or air conditioning system.
• Development costs for new lines or road contributions .

You cannot claim these expenses as professional costs or alimony on your tax return . The legislator considers value-enhancing renovations as an asset transfer: you're exchanging cash for tangible property value. But the money isn't lost. Value-enhancing renovations increase the investment costs. This means that if you later sell the house, you can deduct these costs from the capital gain. As a result, value-enhancing renovations significantly reduce the capital gains tax. It's therefore a tax deferral, not a tax exemption.

The gray area: When old meets new

Most renovations are a hybrid. If you're renovating a 40-year-old bathroom, you're not just replacing old tiles (maintenance), but perhaps also installing a rain shower and a double vanity (increasing the value). In this case, it's considered a "better new purchase." The tax office divides the costs. Part is considered maintenance, the rest value-enhancing renovations . Since the exact allocation often leads to disputes, many tax offices use flat rates or estimates. Important for you: Document everything. Only then can you prove what portion is genuine value-enhancing renovation and what portion is maintenance.

The big exception: energy-saving measures

Here, the Swiss state shows its generous side. Energy-efficient renovations are almost always technically considered value-enhancing improvements . Thermal insulation or a heat pump is far superior to the previous condition. Nevertheless, in almost all cantons (and at the federal level), you can deduct these value-enhancing renovations 100% from your income, just like maintenance expenses! This applies to:

• Thermal insulation (roof, facade , floor).
• New windows ( better) Insulation values ).
• Switch to renewable heating systems (heat pump, solar, wood).

This is a massive tax incentive. You carry out value-enhancing renovations , increase the value of your home, and simultaneously reduce your income tax immediately. Furthermore, you can often spread these costs over up to three tax years to break the tax progression – a privilege that regular value-enhancing renovations don't enjoy .

Flat-rate deduction vs. actual costs

Every year you have a choice: Do you deduct a flat rate (usually 10–20% of the imputed rental value) or the actual costs? The strategy is simple :

• In years without major work, you choose the flat rate.
• In years with major renovations (maintenance or energy- efficient, value-enhancing renovations ), you choose the effective costs.

Classic value-enhancing renovations (like a conservatory) are not included here – they are never tax-deductible, regardless of the method you choose. They belong in a separate folder under "Investment Costs" for later sale.

Documentation is money in the bank.

Whether maintenance-related or value-enhancing renovations : the key lies in the accounting. If you sell your house in 20 years, you'll need to prove to the tax office what you've invested. If you lack receipts for your value-enhancing renovations , the tax office won't recognize them. The result: your taxable capital gains will be higher, and you'll pay thousands of francs too much in taxes. Create a folder for each renovation. Ideally, separate materials and labor on the invoice. Note whether it's maintenance or value-enhancing renovations . A "Roof conversion 2024" clearly falls under value-enhancing renovations , while "Roof repair storm damage" is maintenance.

Conclusion

This distinction is essential for your financial planning. Maintenance work and energy-efficiency improvements reduce your annual tax burden. Classic value-enhancing renovations (increased comfort, extensions), on the other hand, are investments that only have a tax-reducing effect on capital gains tax upon sale.

The most common mistake is failing to properly document value-enhancing renovations because they can't be deducted immediately. However, these documents are invaluable when selling a property. Use the energy efficiency exemption strategically to claim value-enhancing renovations for tax purposes right away, and plan major renovations over several years.

If you are unsure how to classify your planned renovations or need help documenting your investment costs, Loft offers structured tools and support for this.

Glossary

• Value-enhancing renovations: Construction measures that improve the standard of the property beyond its original condition (e.g., extensions) are not tax-deductible for income tax purposes, but they do reduce capital gains tax on real estate later.
• Preservation of value: Work that maintains the existing condition and functionality (e.g., repairs) . full from the controllable income tax deductible .
• Energy efficiency measures: Investments in energy efficiency (e.g., heat pumps). Although these are technically value-enhancing renovations , they can be deducted for tax purposes like maintenance.
• Flat-rate deduction: A fixed percentage of the imputed rental value (usually 10–20%) that can be deducted instead of the actual costs. It is worthwhile. in years without larger Renovations .
• Investment costs: The original purchase price plus all value-enhancing renovations carried out over the years . This sum is deducted from the proceeds upon sale to determine the taxable profit.