From 2018 the basic allowance will be DKK 40,000. The basic allowance was DKK 20,400 in 2014 and rose to DKK 20,700 in 2015. In 2016 it was DKK 21,000 and in 2017 DKK 21,400.
Rental income and income from consumption tax must be declared.
This method is the most widely used for rental homes and ideal for house-owners whose rental is limited by e.g. own stay in the holiday house
By using this method the initial DKK 40,000 gross rental income per holiday house is tax free.
If the property is sold, then the buyer and the seller get DKK 40,000 basic allowance for that year. In the case of a holiday house being owned by several persons, then the owners only become entitled to a basic allowance of DKK 40,000 once when reporting the yearly taxable rental income.
All income (rent plus tenant payment for electricity, oil, telephone, etc.) can be deducted an additional deduction rate of 40% after the basic allowance of DKK 40,700 is used.
The 40% basic allowance covers all costs associated with rental. You must pay the full property value tax of the holiday house the entire income year - and that cannot be deducted property taxes beyond the 40% deduction rate.
The remaining amount is taxed as capital income.
Example: Deduction of 40%
|Gross Rental Income||DKK 72,000.-|
|+ power, oil, telephone etc.||DKK 8,000.-|
|Total Rental Income||DKK 80,000.-|
|Basic Allowance||DKK 40,000.-|
|Total Rental Income - Basic Allowance||DKK 40,000.-|
|40%-deduction of 40,000||DKK 16,000.-|
|For Taxation as Capital Income||DKK 24,000.-|
|Tax by Negative Income 42%||DKK 10,080.-|
|Profit after taxes 80,000-10,080||DKK 69,920.-|
You pay full property value tax of the property. Interest expenses relating to loans in the holiday house can be fully deducted from your taxable income as negative capital.