It is regarded as commercial rentalf, if you rent out your property, which you do not live in, for a period of at least 12 months. This means that the income is personal income, and you must keep accounts and complete your tax return.

Correct your tax return

Correct your preliminary tax assessment

Any profit is personal income on which you have to pay tax and labour market contributions like you do on your salary.

Any loss you make is deductible. When you complete your tax return, your tax and allowances are calculated automatically.

  • Enter any profit in box 111
  • Enter any loss in box 112
  • Enter interest expenses in box 117

If you state in your preliminary income assessment that you rent out your property, you will be paying the right amount of tax during the year.

  • Enter any profit in box 221
  • Enter any loss in box 435
  • Enter interest expenses in box 488

If you rent out a cooperative home or sublet your rental accommodation, it is usually not regarded as commercial rental.

This means:

  • that you do not need to complete a tax return
  • that any profit must be entered in box 20 in your tax return and in box 250 in your preliminary income assessment
  • that you cannot deduct any losses
  • that you cannot make use of the capital income or business tax scheme

Usually, you can claim the expenses for rent/rent charge that you pay yourself.

In most cases, you can make use of the capital income and business tax scheme.

Read more about the return on capital taxation scheme and business tax scheme

You must keep accounts of your income and expenses. You only need to show us your accounts if we ask you to.

The full amount of rent you receive from your tenant should be included as income in your accounts. You must include the actual market rent even if the rent you collect is lower. This may apply if you are renting out property to a family member. You must always pay tax on the amount corresponding to the market rent. The market rent is the rent you can collect if you rent out property to an unrelated person under the general landlord legislation.

Read more in Danish about tax on buy-to-let property for your children and other family members.

  • Property taxes
  • Maintenance
  • Water, sewer and refuse collection charges
  • Administration and accounting assistance
  • Property insurance 
  • Chimney sweeping, snow removal and sweeping
  • Membership fees for owners’ association
  • Write-off of any connection charges
  • Electricity, water and heating

If your tenant pays for electricity, water and heating as part of the rent, you can deduct these expenses in your accounts. At the same time, the amount must be added to the total rental income.

If the tenant pays separately for electricity, water and heating, these expenses should not feature in your accounts.

In addition, you can deduct interest expenses such as mortgage interest and interest on road and sewer debt from your capital income in your tax return, box 117. You only have to pay property value tax for the period you lived in the property yourself.

As a general rule, you are entitled to deduct the expenses you have for maintenance but not for any home improvements that bring the standard of the home to a higher level than when you moved in or started to rent it out.

Read more below under Maintenance and home improvements.

You only have to pay property value tax if you have lived in the property or have had access to the property for part of the year.

If this is the case, you must correct your tax return. Click Vis (Show) next to the property and state how many days your property has been rented out.

You can deduct expenses for maintenance needed as a result of normal wear and tear during the time you own the property, such as painting costs and minor repair jobs.

The longer you own (and rent out) the home, the more maintenance expenses you will typically have.

Expenses for repairing damage, such as burst pipes or damp damage, can only be deducted if:

  • They are not covered by insurance or compensation.
  • The damage happened after you bought the property.
  • The repairs are not an improvement of the property compared to its condition immediately prior to the damage.

Normal practice is that during the first three years of ownership, you can deduct maintenance costs corresponding to a maximum of 25% of the annual rental income from renting out a flat, and 35% of the annual rental income from renting out one and two-family houses.

You cannot deduct expenses related to making improvements to your property, such as installing central heating or a new bathroom. However, you may replace the kitchen or bathroom as part of your improvements if it was worn out during the period of rental. As a result, the size of the deduction is related to how long you have been renting out the home.

It may be difficult to clearly define if an expense is considered maintenance or improvement as the same expense some times fall within both categories. 

Example 1:

You have owned the home for 12 years and rented it out for the past 10 years. You put in a new kitchen costing DKK 39,000. The life of the kitchen is estimated to be 30 years. As a result, the deductible expense is calculated at 10/30 of DKK 39,000, and equals DKK 13,000.

Example 2:

You have owned and rented out the home for 5 years and you put in new windows for DKK 35,000. The life of the windows is expected to be 40 years. The deductible expense is calculated at 5/40 of DKK 35,000 equalling DKK 4,375.

When you sell the property, you will be taxed according to the rules set out in the Danish Act on Taxation of Profit from the Sale of Real Property (Ejendomsavancebeskatningsloven).

Read more about the Act in Danish in our legal guide

However, if you have lived in the property yourself, you may be able to sell it tax-free.

Read more about this rule in Danish in our legal guide

Two-family properties are properties that consist of two separate residential apartments. The flats may be in the same building or in two separate buildings on the same site.

If you rent out an apartment you do not live in yourself, you must declare the full rental income in your tax return as income from capital.

Renting out one of two apartments in a two-family property where you live in the other apartment, is not regarded as commercial rental. Therefore, you cannot deduct the actual running costs of the property in connection with renting it out.

If the property is rented out a lot, the pro rata property taxes may be deducted. You must pay property value tax on the property you live in yourself.

If your tenant pays you a fixed amount for electricity, water and heating, these payments are included as part of the rental income. In that case, you can get a deduction for the share of the payments that relates to your tenant.

If your tenant pays for electricity, water and heating directly to the energy supplier, these amounts are not relevant for you as a landlord.