Deductibility of noise protection costs as property maintenance denied for private assets

Facts

The appellants, a married couple (the taxpayers), have their tax domicile in [U.] /SH. They live in an owner-occupied house held as private assets, which also contains an annex apartment (Einliegerwohnung).

Since about 2013, the taxpayers felt disturbed by nighttime noise and sound immissions, which they attributed to two commercial businesses in the neighbourhood (a bakery and a butcher's shop). In 2015 they approached the Intercantonal Laboratory (IKL), which carried out emission-side noise measurements. Because they were dissatisfied with the official handling, in spring 2016 they commissioned immission-side measurements and expert reports at their own expense. They did not take civil action against the emitters.

In their 2016 tax return, the taxpayers claimed expenses of CHF 13'803.70 under the heading 'property maintenance costs'. These expenses derived from four invoices from two service providers ([D. GmbH] and [E. AG] ) for noise measurements, expert reports and investigations. The local tax administration refused the deduction, and the tax commission confirmed this in its objection decision of 5 April 2019.

The Cantonal Court of Schaffhausen dismissed the appeals by decision of 5 October 2021 (66/2019/7 and 66/2019/9). It reasoned that the expenses had not served to protect the owner-occupied house or to eliminate the emission sources, but to establish and document the noise situation, so there was no building maintenance. A comparison with attorney and court costs was not possible in the absence of civil or administrative proceedings. Costs for disability-related aids, deductible administrative costs and planning costs for environmental protection measures were likewise rejected. The Cantonal Court left open whether the usage value was objectively impaired.

By public law appeal of 3 November 2021, the taxpayers requested that the amount of CHF 13'803.70 be admitted for deduction. They argued that the measures were meant to enable the re-letting of the vacant annex apartment and to mitigate the health consequences (sleep deprivation, sudden hearing loss of the wife). The tax commission and the Federal Tax Administration (FTA) requested dismissal of the appeal.

Considerations

The Federal Supreme Court examined the admissibility requirements (Art. 82 let. a, Art. 86 para. 1 let. d FSCA in conjunction with Art. 146 DFTA and Art. 73 DTHA) and found them satisfied. It applies federal law ex officio and reviews with full cognition (Art. 106 para. 1 FSCA, Art. 95 let. a FSCA), whereby only asserted complaints are to be examined. The violation of constitutional rights is subject to the qualified duty to raise and substantiate complaints (Art. 106 para. 2 FSCA). Findings of fact may only be corrected in cases of obvious inaccuracy (arbitrariness) (Art. 105 para. 2 FSCA).

Property maintenance costs are, under Art. 32 para. 2 DFTA or Art. 9 para. 3 DTHA, deductible only if they constitute costs of acquiring income. Deductibility is limited to operating, maintenance and administrative costs (Art. 1 para. 2 FTA-FLO). Maintenance costs must preserve, restore or replace the concrete usage value of the property and must have a direct economic and temporal connection with the imputed rental value or rent. Living costs are not deductible (Art. 34 let. a DFTA). A holistic assessment is decisive.

The taxpayers have neither pursued the civil route (Art. 679 and 684 CC, precautionary taking of evidence under Art. 158 CPC) nor the administrative route (Art. 13 EPA, Art. 33 and 56 APA by…