Do you live in another Nordic country and own real property in Norway?
This applies to you who live in another Nordic country and have real property in Norway. By real property is here meant a house, a flat or a holiday home.
Taxation in Norway
If you live in another Nordic country and own real property in Norway, you have a limited tax liability in Norway on the tax value of and income from your real property.
The tax value of and income from real property are calculated in the same way as when the owner of the real property is tax resident in Norway. Persons not resident in Norway are assessed in class 0 and are not entitled to a personal deduction.
If you live abroad and have real property in Norway, you will receive a Norwegian tax return. If you have taxable rental income from letting the property, you must submit your tax return together with the form “Letting etc. of real property” (RF1189E). The deadline for submitting your tax return is 30 April of the year following the income year. If you do not receive your tax return form, you should contact the Norwegian Tax Administration.
The tax authorities determine a tax value for real property. It is this value that constitutes taxable capital.
The tax value of residential property in Norway is determined differently depending on whether the residence is a primary dwelling, a secondary dwelling or a holiday home.
If the property is your primary residence, the tax value will be 25 per cent of its estimated market value. You can find this value by entering details of the dwelling in the tax return or using the housing calculator at skatteetaten.no.
As a rule, your primary dwelling will be the one which is your home at year-end. You can only have one primary dwelling. If you have your permanent home in another Nordic country, your residence in Norway will not normally be a primary dwelling under Norwegian rules.
If the property in Norway is a secondary dwelling, but not a holiday home, the tax value will be 90 per cent of its estimated market value. You can find out this value in the same way as for a primary dwelling. Residential properties other than a primary dwelling are considered to be secondary dwellings, and these include commuter accommodation, dwellings that you let and year-round dwellings used as holiday homes. This also applies when you yourself use the dwelling as a holiday home.
Holiday homes typically include cabins, other holiday properties and apartment complexes built exclusively for holiday use. New holiday homes will not be valued at more than 30 per cent of the construction costs, including the plot of land. If you buy a used holiday home, you take over the tax value from the person you buy from.
The tax value of holiday homes may be adjusted annually. This is decided on each year. For 2019 and 2020 there is no adjustment of the tax value.
If the tax value for primary dwellings and holiday homes is more than 30 per cent of the documented sales value, you can ask for it to be reduced. The tax value of holiday homes can be reduced if is substantially above the level of comparable holiday homes in the same municipality. For secondary dwellings you may only ask for a reduction of the tax value if the tax value is higher than the dwelling's documented market value.
If you have real property in Norway, you are in principal allowed a deduction for debt related to the real property. When the real property in Norway is a secondary dwelling, which is valued at 90 per cent of the market value, your deduction for debt will be reduced. You will find more information at skatteetaten.no.
Rental income from real property is in principle taxable.
However, if you let your own home for 30 days or more, the income is tax-exempt when you:
- Let up to half of the house/flat, based on the letting value or
- Let the whole or a large part of the house/flat for up to NOK 20,000 a year
If you let the whole or a part of your home for less than 30 days, the income will be tax liable in accordance with a standard method. Rental income up to NOK 10,000 per year is tax-free and, of the excess amount, 85 per cent is considered tax liable income. The 30-day period applies to each individual letting. The threshold of NOK 10,000 applies to your home for the entire income year, and not per letting. You will find more information at skatteetaten.no.
When letting a holiday home that you yourself use for leisure purposes to a reasonable extent, the first NOK 10,000 in rental income is tax-exempt. If the rental income exceeds NOK 10,000, 85 per cent of the excess amount is taxable income.
If the house/flat in Norway is neither your habitual residence nor your holiday home, you will be taxed using an accounts-based assessment. This means that the net income from the house/flat, i.e. the difference between the rental income and the actual operating and maintenance costs, will be taxed. If you have taxable rental income from letting the house/flat, you must submit your tax return together with the form “Letting etc. of real property” (RF1189E).
If you have real property in Norway you may claim a deduction for debt interest for the debts relating to the real property. Mortgage debt which has been raised and registered on acquisition of the property or later investments in the property are normally considered to be sufficiently connected with the property.
Capital gains on sale
Capital gains on the sale of real property are in principle taxable in Norway. The tax rate is 22 per cent in 2020 (22 per cent in 2019).
Capital gains on the sale of your house/flat are tax-exempt if you have owned the property for more than one year and you have used it as your own residence for at least one year during the last two years preceding the sale.
Capital gains on the sale of a holiday home are tax-exempt if you have owned the house for more than five years and have used it as a holiday home for at least five of the eight years preceding the sale.
Losses are only tax-deductible if any capital gains would have been taxable.
In some municipalities in Norway you are liable for municipal property tax. In some municipalities, the municipal property tax for primary and secondary dwellings is determined on the basis of the estimated market value used to determine the tax value on real property. You will find more information on property tax at skatteetaten.no.