Property Rental

‍Private Rental

Partial Rental – Capital Income

‍If you rent out rooms or partially rent out your owner-occupied home for part of the year, the income from the rental (rent including heating, electricity, and other rental-related income) is taxed as capital income. As a landlord, you can choose between two methods to calculate the taxable income: the accounting method or the standard deduction.

• A) The Accounting Method

‍‍With the accounting method, you pay tax on rental income minus deductible expenses. Please note that once you have chosen the accounting method, you cannot later switch to the method with the standard deduction. Not all expenses are deductible under the accounting method. For example, expenses for the maintenance of the property itself and insurance cannot be deducted. However, there is a reduction in the property value tax for the part of the owner-occupied home that is rented out during the rental period. A deduction is also granted for the proportional share of property tax (land tax) if the rented portion of the home constitutes at least 10%.
Other expenses that you can deduct include:

• Consumption expenses (electricity, water, heating)
• Maintenance costs and depreciation on furniture (but not household appliances)
• Expenses related to the rental, such as advertising costs

If you rent out the entire home for a period without living in it yourself, there is a 100% deduction for actual expenses and a 100% reduction in property value tax, proportional to the length of the rental period.

You cannot deduct a loss for partial rental.
Please note that the Danish Tax Authority requires a calculation of rental income and expenses, which must be presented upon request. In addition, documentation for the deducted expenses must be available.

• B) Standard Deduction

The standard deduction is the simplest and most straightforward method for calculating taxable income. You only pay tax on rental income when the annual rental income exceeds the standard deduction. Starting from the income year 2021, the standard deduction depends on whether you rent your room or home for less than 4 months (short-term rental) or more than 4 months to the same person (long-term rental).

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Standard Deduction for Rental

• Short-term rental (less than 4 months):
  The standard deduction depends on whether you rent out the property privately or through a rental agency or platform (e.g., Airbnb). The standard deduction for rentals through an agency or platform is DKK 31,200 in 2023 and DKK 32,300 in 2024 (see skattesatser.dk). The standard deduction for private rentals is DKK 12,200 in 2023 and DKK 12,700 in 2024 (see skattesatser.dk). You only pay tax when your rental income exceeds the standard deduction. To calculate the taxable income, you can subtract an additional 40% of the amount that exceeds the standard deduction. This means you only pay tax on 60% of the portion of the rental income that exceeds the standard deduction.
  You cannot deduct property taxes, consumption expenses, or get a reduction in property value tax.
• Long-term rental (more than 4 months to the same person):
  If you rent out your owner-occupied home for more than 4 months to the same person, you can, in addition to the rules described above for short-term rental, choose a different set of rules. As a homeowner, you can calculate a standard deduction equivalent to 1.33% of the property value, with a minimum of DKK 24,000. Rental income that exceeds this standard deduction is taxed as capital income.

VAT

‍If you rent out rooms for less than 30 days per rental period, you may be required to pay VAT. This applies if you rent rooms to people who are temporarily staying and do not change their residence. You become liable for VAT when rental income exceeds DKK 50,000 annually.

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Advice

‍If you do not have the time or inclination to familiarize yourself with the rules, we recommend seeking professional advice. You can contact our partner, SkatteInform.dk.

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Disclaimer

‍The above information is for guidance purposes only, and we accept no responsibility for decisions made based on this information without prior individual advice. We accept no responsibility for errors or omissions.

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Tax on Subletting of Rental or Cooperative Housing

‍If you are a cooperative owner or tenant, your standard deduction corresponds to two-thirds of your total annual housing charge/rent. Please note that rental income exceeding the standard deduction is considered personal income when subletting a rental or cooperative property.

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