Denmark

In Denmark, real estate taxes are regulated by the central government and local municipalities. The key types of taxes related to real estate in Denmark include:

Property Ownership Tax

Property Tax: In Denmark, property tax is applied to both residential and commercial properties. The tax is calculated based on the property's value as assessed by the Danish tax authorities.

• The property tax rate consists of two components:
• Land tax is set at 1.6% of the property's value for residential properties (up to a certain value threshold) and 3.4% for commercial properties.
• Building tax is a fixed amount based on the property's location and type, which varies from region to region.
• Overall, the total property tax is typically around 1% to 3% of the property’s value per year.
• The property tax is paid annually, and the property owner is responsible for payment.

Real Estate Transfer Tax

The real estate transfer tax (also known as stamp duty or registration fee) is levied when a property changes ownership, such as during a sale.

• The standard tax rate for real estate transfers in Denmark is 0.6% of the purchase price or the market value, whichever is higher.
• The transfer tax is typically paid by the buyer at the time of purchase.
• If the property is used for business purposes, additional taxes may apply, and exemptions may be available for certain types of property transfers.

Capital Gains Tax on Real Estate

Capital gains tax applies when a property is sold at a profit. However, exemptions may apply for primary residences under certain conditions.

• The general capital gains tax rate is 27% on the profit made from the sale of the property (the difference between the sale price and purchase price).
• If the property was used as a primary residence for at least 2 years, the sale may be exempt from capital gains tax.
• For properties owned for more than 2 years, there may be an exemption from capital gains tax if the property is sold at a loss.

Inheritance and Gift Tax

Denmark imposes an inheritance and gift tax on the transfer of real estate through inheritance or gifts.

• The inheritance tax rate is 15% for direct heirs (children, spouses), and 36.25% for other beneficiaries.
• Gift tax is treated similarly to inheritance tax, with the same rates applying to the transfer of real estate as a gift.
• Any capital gains tax on the property will apply if the property is sold after inheritance or gifting.

Municipal Tax

In addition to national property tax, local municipalities in Denmark may impose additional taxes or levies for public services or local infrastructure.

Income Tax on Rental Income

If rental income is generated from real estate, it is subject to both federal and local income taxes. The tax rate depends on the total income and tax bracket of the property owner.

• Rental income is taxed as part of the overall personal income tax, with rates ranging from 37% to 55%, depending on the income level.
• Property owners can generally deduct related expenses, such as maintenance costs, property management fees, and mortgage interest, from their rental income.
• If the rental property is sold, any capital gains tax will apply to the profit made from the sale.