Deducting Loan Interest from Taxes: How It Works

Debt interest as a tax deduction

In Switzerland, debt interest – the interest you pay on a loan – can be deducted from your taxes. This deduction applies to both the federal direct tax and cantonal and municipal taxes. The requirement is that debts and interest are correctly declared.

What can be deducted?

The interest actually paid on a consumer loan is deductible, but not the principal repayments (amortization). The interest is deducted from your income. At the same time, the outstanding balance must be declared as a liability in the asset statement, which reduces your taxable wealth.

Limitation of the deduction

The debt interest deduction is limited to the amount of taxable asset income plus CHF 50'000 (federal tax). Different rules may apply at the cantonal level. In practice, this limit is not relevant for most private individuals with a consumer loan, as the interest amounts typically fall below it.

Practical implementation

Request an annual interest certificate from your lender. Enter the interest paid in your tax return under debt interest. Declare the outstanding balance as of December 31 in the debt schedule. Keep all receipts carefully.

Frequently asked questions