May 23, 2024

Envious left-wing politicians prevent the abolition of the imputed rent. Retirees are told to keep paying and pushed into misery

Switzerland has one of the highest private debts in the world. With 277 percent of GDP, Switzerland ranked third among OECD countries in 2021, well above the United States at 101 percent, Japan at 122 percent or the average of the four big EU countries (Germany). France, Italy and Spain) with 104 percent.

The reason for this is the higher level of mortgage debt on owner-occupied homes, which, however, is offset by greater equity on the asset side.

The 2021 household accounts according to Swiss central bank statistics show that private household assets of CHF5,430 billion significantly exceeded CHF 965 billion liabilities. Cash and bank deposits alone amounted to 914 billion Swiss francs. Real estate value 2402 billion against 897 billion Swiss francs of outstanding mortgages.

Even if the mortgage and landlords don’t match, many homeowners can easily pay off their mortgages, or at least partially reduce them, using their savings to do so. But they don’t because their savings and account balances as well as custodial accounts give them a great deal of financial freedom.

However, many home builders also finance their homes with borrowed capital because the mortgage interest paid is deductible from taxable income. But in exchange they have to pay tax on the fictitious income of their self-occupied home. This so-called rental value is usually determined by the tax offices on the basis of comparable rents in the neighborhood. The lagged rent values ​​are also regularly increased due to inflation. After that, the homeowners have to pay more taxes, even though there is no additional tangible income with which they can get away with the higher taxes due to higher rents in the neighborhood.

The home must also be taxed as an asset. The state also collects transfer fees and value-added tax on construction and maintenance work. Tax-wise, homeowners are required to pay the worst.

This problem particularly affects seniors who bought their homes long ago and had the ambition to pay off their homes while they worked. As long as they earn a comfortable occupational income, the tax burden is mostly bearable. But when they retire, the AHV and retirement fund pensions are often not enough to pay the increased taxes. Then they either have to vacate their home or take on new debts. But as it is well known, banks are reluctant to give new loans to old people, because for banks, the ability to bear interest from current income is a criterion set by the Banking Supervisory Authority for Lending. The income must be sufficient to pay 5 percent interest.

With regard to the tax system, it is true that debt interest can only be deducted from taxable income if it has already been incurred for monetary benefit. But taxpayers should at least be able to choose whether they want to follow this tax practice, which is usually beneficial to them in times of rising interest rates, or whether they want to do without it.

From an economic point of view, it makes sense to reduce risks in the banking system by reducing public debt. Even a partial payment of the mortgage would improve the creditworthiness of the collateral deposited and thus the credit portfolios of the banks. There have already been several attempts to cancel this imputed rental value. But every time a bill was debated in parliament or voted on at the polls, left-wing politicians stirred up envy and resentment against the homeowners. Their property belongs to Satan. But one should be glad that there are still people who pay for their homes and are therefore not a burden to the state in old age.

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