New leading ruling of the Federal Supreme Court: Property costs can also be deducted in the case of total renovations

Until now, the Federal Supreme Court refused to deduct property costs in the case of total renovations and conversions that were economically equivalent to a new building. The Federal Supreme Court has abandoned this practice in a ruling on the total renovation of a farmhouse in the canton of Fribourg.

Now all costs that serve to restore a property to its former condition may be deducted as maintenance costs.

The decisive factor in all cases is an objective-technical approach and not an economic approach. For this reason, the tax authorities must in future also apportion the costs of larger, cost-intensive renovations on the basis of an individual consideration of the structural measures. The costs of all measures that serve to maintain value can be deducted from taxable income.

In the case of comprehensive renovations, it is therefore advisable to

• to document the renovation work in detail with receipts and photos,
• to divide the work into value-maintaining and value-enhancing items and to document it, and
• present a list of all costs to the tax authorities.

(Source: BGE 9C_677/2021 dated 23.2.2023)