Navigating property taxes can be complex, especially for Danes abroad. Whether buying or selling property in Denmark, understanding Danish property value tax is crucial. This guide highlights key aspects of property taxes, focusing on exemptions and reductions.
You will automatically be charged Danish property value tax from the day of acquisition when you are buying a home in Denmark – but often, you can lower the payable property value taxes if you move in later or move out sooner. The same applies if you vacate the property before a sale is complete.
It is important to differ between property tax and property value tax. Property tax is calculated on the land on which the property is located, whereas the property value tax is calculated on the value of the property. As of 2024, both taxes are payable via your personal taxes and collected via the preliminary tax assessment and ultimately your annual tax statement. Another update to the property taxation in 2024 is that instead of using historical property values as basis for the taxation, the current market values are instead applied. Subsequently the applicable tax percentages are lowered.
Property value tax is paid on, for example, houses, condominiums, and holiday homes at a rate of 0,51 pct. of the part of the current public valuation (less 20 % discount) not exceeding an amount of DKK 9,200,000 and 1,4 pct. on the exceeding part. Consequently, for a newer house with a public valuation of DKK 5,000,000, the property value tax amounts to DKK 20,400 annually.
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The automated calculation with the Danish tax authorities is depending on the date of acquisition on the deed, as this determines when the calculation of the property value tax starts and ends. However, in the case of houses and condominiums (but not holiday homes) property value tax is can – under certain circumstances – be postponed until the date where the owner actually moves in the house or apartment.
Consequently, if the actual move-in or move-out does not occur on the same date as the acquisition or transfer, then the owner may be able to exempt property value tax for the period, in which the owner has not lived there – although it depends on the specific circumstances and is depending on a case-by-case assessment.
As of 2024 the Danish property tax is collected via the personal taxes. The level of property taxes payable depends on the specific municipality. Property taxes are payable for the full period of ownership, without consideration of moving dates, uninhabitability etc. If the property is rented out, then the property taxes may be deductible in the taxable rental income.
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 dwelling 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. It will always be subject to a case-by-case assessment.
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 from moving into the house or apartment at the time of acquisition. However, it has previously been accepted that no property value tax is payable if the postponed 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 date of sale, then it is possible to avoid paying property value tax for the period of vacancy, but requires that e.g., the keys are handed over to the realtor, or new property is moved into. The same applies if the property is rented out because it cannot be sold immediately. In any case, it is important that this is corrected via the Danish tax return.
