You must pay tax on any rental income you receive from renting out property you live in for part of the year, or from renting out one or more rooms.

You can choose between a standard deduction and an accounting deduction. You only have to pay tax on rental income that exceeds the standard deduction.

If you rent out a room for less than 30 days per rental arrangement, you may also need to pay VAT. If the tenant pays for other services, such as meals and bed linen, you must pay tax on the profit you make from providing these services.

Enter your rental income in your tax assessment notice

Enter your rental income in your preliminary income assessment

Your standard deduction for renting out property from 2021 depends on whether you rent out your room or property for less than 4 months (short-term rental) or more than 4 months (long-term rental).

If you rent out property for less than 4 months, your standard deduction will depend on whether you rent out through an agency or a portal (such as Airbnb) or privately. You must be the owner, housing cooperative member or tenant of any room or property you rent out. 

The standard deduction for rental through an agency or portal is DKK 29,900 in 2021. 
The standard deduction for private rental is DKK 11,700 in 2021.

You will be taxed on 60% of the rental income that exceeds the standard deduction. The rental income is the total rental income, including payment for services such as electricity, water, heating and internet.

To calculate the taxable income, you deduct the standard deduction from the rental income and next you deduct 40% of the amount above the standard deduction. Please see the below examples. You cannot deduct your expenses (including lighting, water and heating).

You are not entitled to a deduction in your land tax (property tax) and your property value tax will not be reduced.

Renting out property through an agency or a platform

If you rent out property through an agency or platform, your rental income will be reported to us. Remember to enter this income in your preliminary income assessment.

Private renting

If you are in charge of renting out your property, your rental income is considered income from capital. This means that you must enter your income less the standard deduction and reduced by 40% in box 37 of your tax assessment notice and in field 218 of your preliminary income assessment.

Example: You rent out a room in your property through an agency

Eric rents out a room in his property through an agency, which gives him a standard deduction of DKK 29,900. (2021). He has had an annual rental income of DKK 36,000 and has charged an additional DKK 3,000 for electricity, heating and water. The calculation looks like this:

Annual rental income DKK 36,000
Payment for electricity, water and heating + DKK 3,000
Total income = DKK 39,000
Standard deduction - DKk 29,900
Amount left after standard deduction = DKK 9,100
40% reduction (of amount left after standard deduction) - DKk 3,640
Amount left after standard deduction, less 40% = DKK 5,460

Box 37 of Eric’s tax assessment notice will show that he must pay tax on DKK 5,460. The same amount must be entered in field 218 of Eric’s preliminary income assessment.

Example: Renting out your entire property for part of the year

Jane rents out her property for two months privately, and as result her standard deduction is DKK 11,700. (2021). She has had an annual rental income of DKK 30,000 and has charged an additional DKK 3,600 for electricity, heating and water. The calculation looks like this:

Annual rental income DKK 30,000
Payment for electricity, water and heating + DKk 3,600
Total income = DKK 33,600
Standard deduction - DKk 11,700
Amount left after standard deduction = DKK 21,900
40% reduction (of amount left after standard deduction) - DKk 8,760
Amount left after standard deduction, less 40% = DKK 13,140

As a result, Jane needs to enter DKK 13,140 in box 37 of her tax assessment notice and in field 218 of her preliminary income assessment.

If you rent out property for  for at least 4 months, you can choose one of two methods of calculating your standard deduction. The amount of rental, the public property assessment and rental income will help you find out which one of the two methods you should use.

Method 1

You have a fixed standard deduction per property.

The standard deduction for rental through an agency or portal is DKK 29,900 in 2021. 
The standard deduction for private rental is DKK 11,700 in 2021.

Read about method 1 under Short-term rental (less than 4 months) above. The same rules apply to the standard deduction of method 1 and short-term rental.

Method 2

If you own the property: The standard deduction corresponds to 1 1/3 % of your property value of the year before the income year, however, no less than DKK 24,000. Any income above the standard deduction is considered income from capital. Therefore, you have to enter you income in box 37 of your tax assessment notice and field 218 in your preliminary income assessment.

If you are a housing cooperative member or a tenant: Your standard deduction corresponds to 2/3 of your total annual rental. Any income exceeding the standard deduction is considered personal income. Therefore, you have to enter you income in box 20 of your tax assessment notice and in field 250 of your preliminary income assessment. 

Example: You own and rent out a room for a period of at least 4 months

John rents out a room of his property. From his tax assessment notice, he can see that the property value is DKK 1,500,000. The standard deduction is 1 1/3% of the property value = 1,500,000/100 x 1 1/3% = DKK 20,000. As the standard deduction is at least DKK 24,000, the deduction is DKK 24,000 in this case.

Annual rental income DKK 36,000
Payment for electricity, water and heating + DKK 3,000
Total income = DKK 39,000
Standard deduction - DKK 24,000
Taxable income = DKK 15,000

As a result, John has to enter DKK 15,000 in box 37 of his tax assessment notice and in field 218 of his preliminary income assessment.

Example: You are a tenant or a housing cooperative member and you rent out your property for a period of at least 4 months

Helen’s rent is DKK 45,000 a year. As a result, her standard deduction is DKK 30,000. (2/3 of the total annual rent).

Annual rental income DKK 35,000
Payment for electricity, water and heating + DKK 3,600
Total income = DKK 38,600
Standard deduction - DKK 30,000
Taxable income = DKK 8,600

Helen then has to enter DKK 8,600 in box 20 of her tax assessment notice and in field 250 of her preliminary income assessment.

If you rented out a room or your entire property in the period of 2018-2020, you can choose between two methods of calculating your standard deduction. The amount of rental, the public property assessment and rental income will help you find out which one of the two methods you should use.

You must be the owner, housing cooperative member or tenant of the room or property you rent out. 

For income years 2018-2020 you can apply the high standard deduction no matter whether you rented out privately or through an agency. However, you can only apply the high standard deduction from income year 2021 if you rent out through an agency.

Consequently, you may apply the high standard deduction of DKK 29,300. (2020) regardless of whether you have rented out privately or through an agency or platform. 

There is one standard deduction per property.

You will be taxed on 60% of the rental income that exceeds the standard deduction. The rental income is the total rental income, including payment for services such as electricity, water, heating and internet.

To calculate the taxable income, you deduct the standard deduction from the rental income and next you deduct 40% of the amount above the standard deduction. Please see the below examples. You cannot deduct your expenses (including lighting, water and heating).

You are not entitled to a deduction in your land tax (property tax) and your property value tax will not be reduced.

You have to enter your income - less the standard deduction and minus 40% - in box 37 of your tax assessment notice and in field 218 of your preliminary income assessment.

Example: You rent out a room in your property through an agency

Eric rents out a room in his property via an agency and therefore his standard deduction is DKK 29,3000. (2020) He has had an annual rental income of DKK 36,000 and has charged an additional DKK 3,000 for electricity, heating and water. The calculation looks like this:

Annual rental income DKK 36,000
Payment for electricity, water and heating + DKk 3,000
Total income = DKK 39,000
Standard deduction - DKk 29,300
Amount left after standard deduction = DKK 9,700
40% reduction (of amount left after standard deduction) - DKk 3,880
Amount left after standard deduction, less 40% = DKK 5,820

As a result, Eric needs to enter DKK 5,820 in box 37 of his tax assessment notice and in field 218 of his preliminary income assessment.

Example: Renting out your entire property for part of the year

Jane rents out her house for two months privately. As she was not required to do so through an agency in 2018-2020, she may apply the high standard deduction of DKK 29,3000 (2020) She has had an annual rental income of DKK 30,000 and has charged an additional DKK 3,600 for electricity, heating and water. The calculation looks like this:

Annual rental income DKK 30,000
Payment for electricity, water and heating + DKK 3,600
Total income = DKK 33,600
Standard deduction - DKk 29,300
Amount left after standard deduction = DKK 4,300
40% reduction (of amount left after standard deduction) - DKK 1,720
Amount left after standard deduction, less 40% = DKK 2,580

As a result, Jane needs to enter DKK 2,580 in box 37 of her tax assessment notice and in field 218 of her preliminary income assessment.

If you own the property: The standard deduction corresponds to 1 1/3 % of your property value of the year before the income year, however, no less than DKK 24,000. Any income above the standard deduction is considered income from capital. Therefore, you have to enter you income in box 37 of your tax assessment notice and field 218 in your preliminary income assessment.

If you are a housing cooperative member or a tenant: Your standard deduction corresponds to 2/3 of your total annual rental. Any income exceeding the standard deduction is considered personal income. Therefore, you have to enter you income in box 20 of your tax assessment notice and in field 250 of your preliminary income assessment.

Example: You own and rent out a room for a period of time

John rents out a room of his property. From his tax assessment notice, he can see that the property value is DKK 1,500,000. The standard deduction is 1 1/3% of the property value = 1,500,000/100 x 1 1/3% = DKK 20,000. As the standard deduction is at least DKK 24,000, the deduction is DKK 24,000 in this case.

Annual rental income DKK 36,000
Payment for electricity, water and heating + DKK 3,000
Total income = DKK 39,000
Standard deduction - DKK 24,000
Taxable income = DKK 15,000

As a result, John has to enter DKK 15,000 in box 37 of his tax assessment notice and in field 218 of his preliminary income assessment.

Example: You are a tenant or a housing cooperative member and rent out your property for a period of time

Helen’s rent is DKK 45,000 a year. As a result, her standard deduction is DKK 30,000. (2/3 of the total annual rent).

Annual rental income DKK 35,000
Payment for electricity, water and heating + DKK 3,600
Total income = DKK 38,600
Standard deduction - DKK 30,000
Taxable income = DKK 8,600

Helen then has to enter DKK 8,600 in box 20 of her tax assessment notice and in field 250 of her preliminary income assessment.

Whether you can apply the standard deduction according to the existing rules depends on whether you own the property or whether you are a housing cooperative member or tenant. Please note that if you use the accounting deduction method, you cannot revert to the standard deduction.

Accounting deduction for owners

If you choose to make use of the accounting deduction, you will be taxed on your rental income minus the actual expenses.

The income is considered income from capital. You must enter your income less your expenses in your tax assessment notice, box 37, and in your preliminary income assessment, field 218.

You should keep a record of rental income and expenses which you must present to us upon request. You must keep the receipts for items you are deducting.

Expenses:

  • Electricity, water, heating, for example.
  • Maintenance costs and write-off of fittings and furniture (except domestic appliances).
  • You cannot deduct expenses for maintenance of the property.

You cannot deduct expenses for maintenance of the actual property or regular operating expenses such as for example refuse collection, chimney sweeping, insurance.

Property value tax relief

You are liable to pay property value tax on the part of the property you rent out. You obtain the relief by entering the rental period and how much of the property you rent out in your tax assessment notice.

Land tax deduction (property tax for your local municipality)

You are entitled to deduct a proportionate part of your land tax as an expense if you rent out at least 10% of your property.

  • If, for instance, you rent out 15%, you deduct 15% of your land tax in the relevant period.

Example - owner (accounting deduction)

Rental income  DKK 18,000
Amount received for electricity, water and heating + DKK 3,000
Total income = DKK 21,000
Proportionate deduction of land tax - DKK 6,000
Proportionate deduction of electricity, heating and water - DKK 3,000
Taxable income = DKK 12,000

You should enter DKK 12,000 in box 37 of your tax assessment notice and in field 218 of your preliminary income assessment. You also need to write how much of your property you rent out and for how long.

Your total deductions cannot exceed your rental income.

Accounting deduction for tenants or housing co-op members

If you make use of the accounting deduction, you will be taxed on your rental income minus the actual expenses.

In 2018, 2019 and 2020, it is optional whether you choose to have your income taxed as personal or capital income. You must therefore enter your income less your expenses in your tax assessment notice and in your preliminary income assessment in one of the following ways:

  • As personal income: In box 20 of your tax assessment notice and in field 250 of your preliminary income assessment.
  • As income from capital: In box 37 of your tax assessment notice and in field 218 of your preliminary income assessment.

You should keep a record of rental income and expenses which you must present to us upon request. You must keep the receipts for items you are deducting.

Expenses:

  • Such as electricity, water and heating.
  • Maintenance costs and write-off of fittings and furniture (except domestic appliances).
  • You cannot deduct expenses for maintenance of the property.

You cannot deduct expenses for maintenance of the actual property or regular operating expenses such as for example refuse collection, chimney sweeping, insurance.

Example - tenant or housing cooperative member (accounting deduction)

Stephen’s monthly rent is DKK 5,000, and he rents out 10% of his rental accommodation for three months.

This results in the following rent: 3 months x DKK 5,000 x 10 per cent = DKK 1,500. 

During the same period, he pays DKK 1,500 for electricity, water and heating:

The cost is: 3 months x DKK 1,500 x 10 per cent = DKK 450.

Rental income  DKK 4,500
Amount received for electricity, water and heating + DKK 500
Total income = DKK 5,000
Proportionate deduction of land tax - DKK 1,500
Proportionate deduction of electricity, heating and water - DKK 450
Taxable income = DKK 3,050

As a result, Stephen needs to enter DKK 3,050 in box 20 of his tax assessment notice, and in field 250 (personal income) of his preliminary income assessment. Alternatively, box 37 or his tax assessment notice and field 218 (income from capital) of his preliminary income assessment.

The total deduction amount cannot exceed the rental income.

Room rental or rental of all-year residence for part of the year (read more in Danish in our legal guide)

If you rent out a room for less than 30 days at a time, you must pay VAT on any income in excess of DKK 50,000 within a period of 12 months. This applies to room rental in owner-occupied homes, housing cooperatives and rented accommodation, but it does not apply to renting out entire properties.

If you know from the first time you rent out accommodation that your income will exceed DKK 50,000, you must register for VAT and pay VAT from the beginning.

If you are registered for VAT for short-term room rental, you must enter the rental income exclusive of VAT, less the standard deduction or any expenses, in your tax assessment notice.

You register for VAT at www.indberet.virk.dk (Danish only)

Read more about VAT liability in Danish in our legal guide

If you rent out your property for a period of more than 12 months, different taxation rules apply:

Renting out property you do not live in