Do you live in another Nordic country and own real estate in Norway?
This applies to you who live in another Nordic country and have real estate in Norway. By real estate 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 capital value of and income from your real property.
The capital value of and income from real property are calculated in the same way, regardless of whether the owner is tax resident in Norway or has limited tax liability. Persons resident abroad 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 tax office.
The tax authorities determine a capital value for real property. It is this value that constitutes taxable capital.
The capital 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, it will be valued at 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 is a secondary dwelling, but not a holiday home, it will be valued at 90 per cent of its estimated market value in 2017 (80 per cent in 2016). 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, 'summer houses' and apartment complexes built exclusively for holiday use. New holiday homes will not be valued at more than 30 per cent of the cost price of construction and land, including the value of your own work. If you buy a used holiday home, you take over the capital value from the person you buy from.
The capital value of holiday homes may be adjusted annually. This is decided on each year. There will be no general adjustment of capital value from 2016 to 2017.
If the capital value for primary dwellings and holiday homes is more than 30 per cent of the sales value, you can ask for it to be reduced. For secondary dwellings, the capital value must be higher than the dwelling's market value in 2017 (96 per cent of the dwelling's market value in 2016). The capital value of holiday homes can also be reduced if it is substantially above the level of comparable holiday homes in the same municipality.
Rental income from real property is in principle taxable.
However, income from letting one’s own home, that is not a multi-unit house, is tax-exempt when the owner:
- Lets up to half of the house/flat, based on the letting value
- Lets the whole or a large part of the house/flat for up to NOK 20,000 a year
When letting a holiday home that you also use yourself, the first NOK 10,000 in rental income is tax-exempt. If the rent 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).
Persons resident abroad who have real property in Norway may claim a deduction for debt and 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 24 per cent in 2017 (25 per cent in 2016).
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 their taxable capital value.