Taxation on purchase and sale of real property

In connection with purchase of real property in Denmark, you must complete and submit the special form 04.063_AP_EN (Foreign labour force – application for tax card and Danish personal tax number (CPR number) for employees). You will need this to obtain a personal tax number and for advance registration in connection with purchase of real property.   

When you own real property in Denmark, you must pay both property tax to the municipality (tax on the land value of the property) as well as property value tax (tax on the full property value, both land value and building value, based on the public property assessment) via your tax assessment notice.  

In some municipalities, there may be a residence obligation for the purchase of a home for year-round residence. This means that you are not allowed to use it as a second home. You should therefore check whether there is a residence obligation in the municipality in which you wish to purchase a home for year-round residence.

You can read more about residence obligation at www.borger.dk – ‘Bolig og flytning’ – ‘Ejerbolig’ – 'Sommerhus’ (Residence and change of address – Owner-occupied home – Holiday home). Scroll down to the item on residence obligation ’Bopælspligt’ (please note that the page is available in Danish only).

As a general rule, you have limited tax liability if you buy a home that you live in while you are in Denmark on holiday or the like. You may stay in Denmark for a maximum of 3 months at a time and for no more than 180 days within 1 year. If you are here for longer periods than that, you will have full tax liability in Denmark. 

• Form 04.063 AP EN – Request for Danish personal tax number and preliminary assessment of income for use in acquisition of property
• Borger.dk – bopælspligt (in Danish)

Renting out property or a room that you live in

You must pay tax on any rental income you receive from renting out property you live in for part of the year, or from renting out one or more rooms.You can choose between 2 models: a standard deduction and an accounting deduction. Most people use the standard deduction as it is the most straightforward solution.

You only have to pay tax on rental income that exceeds the standard deduction.

In 2018, new rules were adopted giving you a higher standard deduction if you rent out property through an agency. Using an agency only became a condition from 2021. The existing rules on calculating the standard deduction still apply. This means that it is possible to choose between 2 different sets of rules in 2018-2020.

Renting out property you do not live in

If you rent out your property, which you do not live in, for a period of at least 12 months, this is regarded as commercial rental. This means that the income is personal income, and you must keep accounts and fill in your tax return.

Renting out your holiday home

You will be taxed on some of your rental income if you rent out your holiday home. You can choose between a standard tax deduction or an accounting tax deduction (in Danish regnskabsmæssigt fradrag).

• Renting out a room or a home you live in
• Renting out property you do not live in
• Renting out your holiday home

If you sell your real property in Denmark, the profit from the sale of the real property must be calculated (if you sell your real property at a higher price than you paid for it).

The profit from the sale of the real property is tax free if the real property has served as a home for you or your household in part of or the whole of the period of your ownership of the real property and if certain other terms and conditions have been met.

You can read more about this at Selling a home. Here you can also read more about the terms and conditions for tax-free sale of a home.  

• Selling a home

You may appeal against your assessed income and deductions as well as your tax assessment to the Danish tax authorities. If you disagree with a decision by the Danish tax authorities, you may appeal to the Danish Tax Appeals Agency (Skatteankestyrelsen) within 3 months from when the decision of the Danish Tax Agency (Skattestyrelsen) was made.

An appeal fee is payable when you make an appeal.  

If you have received a reassessment of the value of your real property in Denmark (for example in connection with new construction or conversion), you may appeal to the Tax Appeals Agency if you disagree with the reassessment. The appeal deadline is 1 July of the year following the year in which the assessment was made.   

• How to appeal: Information about the appeal process at the Tax Appeals Agency
• Reassessment appeal: Klage over omvurderinger (in Danish)

The Danish Property Value Tax Act  (Ejendomsværdiskatteloven) regulates the property value tax area. Please note that the Act is only available in Danish.

Read more about  the rules on profit from sale of real property in section 8 of the Danish Act on Taxation of Profit from the Sale of Real Property. Please note that the Act is only available in Danish.

• Bekendtgørelse af ejendomsværdiskatteloven (in Danish)
• Bekendtgørelse af lov om beskatning af fortjeneste ved afståelse af fast ejendom (in Danish)

Read more about buying or selling property or retning out your home:

• Property