Renting out a home you don't live in
It's regarded commercial rental, if you rent out your property you own but don't 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.
Please note that the information below merely deals with the tax rules on rental of property. Read in Danish about the rental rules according to Sommerhusloven (the Holiday Home Act) (plaininfo.dk)
Any profit is personal income and you have to pay tax and labour market contributions on that as you do on your salary.
Any loss you make is deductible. When you complete your tax return, your tax and allowances are calculated automatically.
- Move interest relted to the home you are renting out from box 41
- Enter profit in box 111
- Enter loss in box 112
- Enter interest expenses in box 117
- Enter number of days that the home has been rented out in box 207 under property details
If you state that you rent out your property in your preliminary income assessment, you'll be paying the right amount of tax during the year.
- Enter any profit in field 221
- Enter any loss in field 435
- Enter interest expenses in field 488
- Enter commercial share (%) in field 744
- Enter number of rental days in field 748 under property details
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 exenses. You only need to submit your accounts if we request it.
The full amount of rent you receive from your tenant should be included as income in your accounts.
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.
You can deduct interest expenses related to your rental property, including interest on your bank loan or mortgage credit. Enter interest related to your business in box 117 of your tax return.
If it is already entered in box 41 or 42 in your preliminary income assessment, you have to correct it. You do so by deleting it from box 41/42 (personal tax matters) and entering it in box 117 (business tax matters) in your preliminary income assessment.
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 only have to pay property value tax if you have lived in the property or have had access to it for part of the year.
This means that you don't have to pay property value tax when the property is rented out commercially. When you specify the number of days the property has been rented out for the year, we don't charge you property value tax for those days.
Read more above 'How to complete your tax return (oplysningsskema' and 'How to complete your preliminary income assessment (forskudsopgørelse)' to find out how you report days of commercial rental.
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.
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.
For further legal information in Danish see our legal guide .