Exemption from property value tax when moving in and out

29 May 2020

On the annual tax statement, you will automatically be charged property value tax from the day of acquisition when you are buying or selling your home, but often, you can save taxe,s if you move in later or move out sooner.

Property value tax is paid on, for example, detached houses, condominiums and holiday homes at a rate of 1 pct. of the part of the calculation basis not exceeding an amount of DKK 3,040,000 and 3 pct. of the exceeding part.

Consequently, for a newer house with a public valuation of DKK 2,500,000, the tax generally amounts to DKK 25,000 annually. The property value tax is charged as part of your personal taxes and is therefore reflected on both your preliminary tax assessment and your annual tax statement.

The systems of the Danish tax authorities are structured such that it is the date of acquisition on the deed that determines, when the calculation of the property value tax begins and ends. However, in the case of detached houses and condominiums – but not holiday homes – property value tax is generally only paid for the period, when the owner actually lives in the house or apartment.

Consequently, if the actual move-in or move-out does not occur on the acquisition date, the owner may be exempt from property value tax for the period, in which he has not lived there, but this requires the owner to report the move-in and/or move-out date to the Danish tax authorities himself.


Exemption on purchase

In cases where the move-in takes place significantly later than the date of acquisition, the possibility of exemption from property value tax depends on, whether the property could actually have served as a home for the owner and his household during the period. If this is the case, generally, the owner cannot be exempted from the property value tax.

So far, the Danish tax authorities have interpreted the rules that the owner can only avoid property value tax due to damage – storm, fire, water damage, mold, etc. – preventing him from moving into the house or apartment at the time of acquisition.

However, in a recent ruling, the National Tax Tribunal ruled that no property value tax is payable if the deferred relocation is due to the property being uninhabitable due to a thorough renovation.


Exemption on sale

If a property is vacated before it is sold or at least before the acquisition date, it is possible to avoid paying property value tax for the period of vacancy, if the date is reported to the Danish tax authorities. The same applies if the property is let out because it cannot be sold immediately.

The above article is taken from tax:watch, our electronic English newsletter on Danish Tax and VAT matters. tax:watch is issued on the last Friday of each month and is free of charge. Please sign up here.