Federal Supreme Court, 11.03.2026, 9C_442/2025
Facts
A married couple, owners of a family home built in 1971, undertook major renovation work between 2017 and 2019. In 2018, the work notably involved the complete demolition of the existing roof structure and its reconstruction. This new construction involved changing the roof pitch and raising the knee walls ("Kniestock").
In their 2018 tax return, the taxpayers requested a deduction for maintenance costs totaling CHF 373,918. The Thurgau cantonal tax administration refused the deduction of CHF 70,000, which corresponded to the costs of the new load-bearing structure and roof covering, classifying these expenses as investment costs that create non-deductible added value.
The Tax Appeals Commission upheld this decision, arguing that the work was akin to a "replacement new build" ("Ersatzneubau") and that the costs were therefore entirely value-enhancing. Upon appeal by the taxpayers, the Administrative Court of the Canton of Thurgau overturned this decision. It ruled that a proportional breakdown of costs should be carried out and referred the case back to the tax administration for further investigation and a new decision. The tax administration appealed this remand judgment to the Federal Supreme Court.
Law
The dispute concerns the classification of the costs of replacing a roof structure as deductible maintenance costs (value-preserving) or as non-deductible investment costs (value-enhancing), both for direct federal tax (art. 32 para. 2 and art. 34 let. d DBG) and for harmonized cantonal and communal taxes (art. 9 para. 3 StHG).
The Federal Supreme Court reiterates its recent case law (BGE 149 II 27) which abandoned the concept of "economic new construction." Under this new practice, for total renovations or major alterations, there is no longer any need to carry out a global economic assessment of the project. Instead, each expense must be analyzed individually according to its "objective and technical nature." The goal is to determine whether the work aims to restore a previous state (value-preserving) or to improve the property by placing it in a better state (value-enhancing). The benchmark is not the overall value of the property, but that of the specific installation being replaced or repaired.
However, this case law does not change the treatment of a true "replacement new build" ("Ersatzneubau"), which involves the complete demolition of a building followed by its reconstruction. In such a case, the costs are classified entirely as added value, because there is no longer a pre-existing building to "maintain."
Application to the specific case
The Federal Supreme Court is examining the tax authority's argument that the complete replacement of the roof structure constitutes a "reconstruction in kind" and that the associated costs are therefore not deductible.
The High Court rejects this classification. It emphasizes that the taxpayers did not demolish and rebuild their entire house, but only its roof structure. The roof structure, while independently replaceable, is merely a component of the building ("Gebäudebestandteil") and not a building in its own right. Consequently, the operation cannot be classified as a "reconstruction in kind" under current case law. It is instead a project involving the total renovation or transformation of an existing building.
Therefore, the new analytical approach established in BGE 149 II 27 must be applied. The Federal Supreme Court finds that the Administrative Court was correct to require a detailed analysis and breakdown of the 70,000 CHF in costs. It is the responsibility of the tax authority, with the cooperation of the taxpayers, to determine:
- The portion of the costs corresponding to the simple replacement of the old roof structure with a new one of the same type (deductible maintenance expenses).
- The portion of the costs attributable to improvements (raising the walls, modifying the pitch), which constitutes an increase in value that is not deductible as a maintenance expense.
- Whether a portion of the additional costs could potentially be deducted as investments intended to save energy and protect the environment.
The Federal Supreme Court specifies that if this breakdown proves impossible, the burden of proof lies with the taxpayers. In accordance with Art. 8 of the Swiss Civil Code, the costs would then be presumed not to serve the purpose of maintaining value and would therefore not be deductible.
Outcome
The Federal Supreme Court dismisses the appeal filed by the Thurgau cantonal tax authority. It fully upholds the decision of the cantonal Administrative Court.
The case is therefore definitively remanded to the tax authority for a reassessment of the 70,000 CHF in costs, by performing a proportional breakdown between value-maintaining expenses (deductible) and value-enhancing expenses (non-deductible), in accordance with the principles set forth. Legal costs are charged to the appellant tax authority, which must also pay legal fees to the taxpayers.
Silex tax newsletter published in collaboration with Anna Vladau, Attorney at Law
