New Housing Tax Rules for 2024

New housing tax rules have now emerged for 2024, which could affect your tax payment. Read more here to find out how it affects you as the owner of your home.

16/11 2023

The new housing tax rules deal with the calculation of property value tax and land debt.

The package of laws provides for lower rates of property value tax and land charge. it is worth noting that the basis of calculation is based on new and significantly higher property valuations.

The housing tax you pay as a homeowner consists of two parts: property value tax and land tax. Property value tax is the tax you pay on the actual disposal of the owner-occupied dwelling. Land liability is the tax you pay for the land on which the home is located. Collectively, we call these taxes the housing tax.

New rates and calculation principles

Property Value Tax

Today, 0.92% is paid in property value tax on the property value up to DKK 3,040 million and 3% of the value above. With the new housing tax cuts, the rate is reduced to 0.51% and is valid until a new progression limit of DKK 9.2 million, after which a new lower rate of 1.4% will have to be applied.

You can get a reduction in the value of your property if you have acquired it no later than 1 July 1998 and get a reduction of 1.0 per thousand (0.1%). Homeowners who have acquired no later than the aforementioned date can receive an additional discount of 2.1 per thousand, please note that a maximum reduction of DKK 1,200 can be obtained.

In future, the most recent assessment will be used as the basis for taxation. It is no longer possible to use property values based on previous years.

Basic guilt

In 2024, the basic debt commission will be set down in all municipalities. The current average basic debt per million will be reduced from 27 per thousand (2.7 per cent) to a new national average of 7.4 per thousand (0.74%). It should be argued that a regulation rate of 2.8% has been implemented. This means that the underlying debt cannot increase by more than 2.8% in the future.

Tax rebate for homeowners

In the case of a property subject to real estate value tax which is acquired (acquired) by 31 December 2023, the old rules will in principle be covered by the old rules. A discount is given when the new rules step into cancer. If you as a homeowner even with the low rates stand to increase in total housing tax, you will get a tax discount that will prevent your housing tax from increasing in 2024. The rebate will make up the difference between the total home tax you will have to pay in 2024 with the new rules and the total home tax you would have had to pay with the current rules, unless it is reduced. Negative rebate means you have been given a tax break under the new rules. This tax discount lapses upon sale of the property.

NOTE: The advance statement has not yet taken into account situations where the calculated housing tax is lower overall, but where there is higher tax on either ground debt or property value tax. For example, if your property value tax increases by DKK 10,000 and your basic debt decreases by DKK 15,000, then you should not get a tax discount. In fact, you stand to have a total tax saving of DKK 5,000 under the new rules in housing tax.

But even so, you get a discount of 10,000 kroner, as the system is not yet ready to link the two taxes together. The error has the consequence that you are charged too little and thus later have to pay the overcharged amount.

If you get an incorrect discount in 2024, the money will later be settled either via a corrected advance statement or via your 2024 annual statement, as excess or residual tax.

Especially with regard to new buildings and redevelopment

For new construction and redevelopment, a tax discount can also be obtained if the construction is completed by 1 January 2024 for land debt and property value tax. If the land is acquired before 31 December 2023 at the latest, but the new construction is declared completed on 1 January 2024, you will not receive a tax discount for the property value tax.

For properties partially used for commercial purposes

If your home is not available as a dwelling throughout the year and, for example, is rented for a period of time, you can still get a reduction in your property value tax for the period that the taxpayer does not live in the dwelling.

If you have rented out part of your home or property as a year-round rental, you can also have your housing tax reduced and only pay for the part of the house/property you have available. You have to pay a basic fee regardless of whether you use the home privately or commercially.

Interest on the Freezing Scheme

The collection of the basic debt is transferred from the municipality to the state, and thus the basic debt must be paid in the future via your advance tax. It should be disclosed that homeowners can continue to use the freezing order for any increases in the future, but new payments into the scheme will no longer be interest-free. After the end of the year, the scheme will have an interest rate of 3,57% (2024). Deposits between 2018-2023 are not interest-bearing. The interest is not deductible, the interest rate is approximately equivalent to 5.3% on a regular bank loan.

Foreign summer residence

Property value tax on dwellings located abroad will be based on trade value in previous income years. For some countries, the Swedish Tax Agency has approved the foreign public assessment. Starting with the income year 2024, the Swedish Tax Agency will approve foreign assessments for properties located in Sweden and the UK. For properties located in other countries where their real estate valuation cannot be equated with Danish valuation, one must use the purchase price in the year of purchase and use a price index to reindex the trade value in order to achieve the same price level equivalent for Danish properties. For properties located in countries where there is no price index for that country, the Danish price index must be used.

Example

We refer to our article hereto, showing an example of calculating property value tax and land debt with tax discount for a Danish property.

What can we help you with?

We can help you adapt to the new rules on property value tax and explain what impact it can have on your housing tax and how you can manage it for tax purposes. Please be more than welcome to contact one of our professional tax advisors for further questions.

We provide qualified answers to your tax questions. If you are interested in assistance with the calculation of taxable income, we are happy to provide you with a fee upon further agreement.

Send an email at info@skatteinform.dk

SkatteInform Statsauthorized

Audit partner company
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We do not accept responsibility for any dispositions that may be made on the basis of this newsletter without prior individual advice. Likewise, we do not accept responsibility for any errors and omissions.

Source:

Reference is made to the Property Tax Act ESL (30/06/2023)

https://www.retsinformation.dk/eli/lta/2023/678

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