Renting Out a Property and Taxation

The rules for renting properties were originally pooled as “special rules” to stimulate room renting in major university cities. They were brought together to make the market more attractive and easier for Danish students to find rented accommodation. In Denmark, these are the same rules that currently apply when Danes want to rent their homes out. For part or all of the year. Read more about renting out a property and taxation right here!

Rental income

Your rental income must, as a rule, always be declared for tax. But according to the rules on taxation, you will not need to pay taxes as long as they do not exceed the so-called basic allowance. An allowance that is calculated differently depending on whether you are the owner or the tenant of the property you rent out. If you as a tenant sublet your apartment, the basic allowance is equal to two-thirds of the annual rent you pay – including heating charges and housing benefit, if you receive it. The same rules may also apply if you are a leaseholder.

Not higher than..

As the owner of a tenanted property, you will not have to pay tax as long as the rental income does not exceed DKK 24,000 a year, or 1.33 percent of your apartment’s property value in the income year. If the property value is, for example, DKK two million, you may declare DKK 26,600 in rent tax-free. In most cases, however, your rental income will exceed this and you should be sure to make a thorough check of your income and expenses.

If you rent out your property for an extended period, your business plan will enable you to deduct your company’s interest expenses from your personal income. You also have the option to make savings in the business by paying emergency tax. In this way, you can carry out a tax equalisation of your income from the business by saving up in good years, and increasing the accumulated profits in bad years.

We recommend you take a look at the TAX website, where you can get help and guidance on calculating your annual basic allowance. However, we at Home Connector recommend that you seek professional help from an accountant before your rental starts.

Find more information about TAX when renting out property. [Link to skat.dk]

The rules for renting properties were originally pooled as “special rules” to stimulate room renting in major university cities. They were brought together to make the market more attractive and easier for Danish students to find rented accommodation. In Denmark, these are the same rules that currently apply when Danes want to rent their homes out for part or all of the year.

 

Rental income

Your rental income must, as a rule, always be declared for tax. But according to the rules on taxation, you will not need to pay taxes as long as they do not exceed the so-called basic allowance – an allowance that is calculated differently depending on whether you are the owner or the tenant of the property you rent out. If you as a tenant sublet your apartment, the basic allowance is equal to two-thirds of the annual rent you pay – including heating charges and housing benefit, if you receive it. The same rules may also apply if you are a leaseholder.

Not higher than..

As the owner of a tenanted property, you will not have to pay tax as long as the rental income does not exceed DKK 24,000 a year. Or 1.33 percent of your apartment’s property value in the income year. If the property value is, DKK two million, you may declare DKK 26,600 in rent tax-free. In most cases, however, your rental income will exceed this and you should be sure to make a thorough check of your income and expenses.

If you rent out your property for an extended period, your business plan will enable you to deduct your company’s interest expenses from your personal income. You also have the option to make savings in the business by paying emergency tax. In this way, you can carry out a tax equalization of your income from the business by saving up in good years and increasing the accumulated profits in bad years.

We recommend you take a look at the TAX website, where you can get help and guidance on calculating your annual basic allowance. However, Home Connector recommends that you seek professional help from an accountant before your rental starts.

 

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