In Denmark, as a homeowner, you have to pay two types of real estate tax: property value tax to the state and property tax, also called basic tax, to the municipality. Taxes are calculated on the basis of the public property assessments made by GFI. Here you can read more about the conditions that apply in connection with property value tax and property tax.
The property value tax
If you own a home, you must pay property value tax. Most people automatically pay the tax on the deduction rate, but if you are an independent trader, the payment will be made on the payment cards you receive with your advance statement every year in November.
The property value tax is calculated on the basis of the property value. In addition, the property value tax is calculated as a proportion of the assessed property value, as stated in the public property valuation. The property value tax represents 1 percent of the property value up to DKK 3,040,000 and 3 percent of the rest if the property value is higher.
The property value tax is subject to a nominal tax stop, which means that the basis for the property value tax is the least of:
- The 2001 assessment added 5 percent,
- The 2002 assessment as well
- the current assessment, which in practice only affects the property value tax for relatively few homeowners.
It is estimated that just under 5 percent of homeowners currently pay property value tax according to the current appraisal, while the remaining 95 percent pay property value tax on the 2001 or 2002 appraisal, which is lower than the current appraisal.
The property tax, also called the land debt, is a tax on the land itself. The property tax is calculated on the basis of the basic value, as shown in the public property assessment. The tax accrues to the municipality where the property is located. The tariff or basic debt profile is determined by the individual municipal councils. However, it is a requirement that the rate in all municipalities must be between 16 and 34 per thousand. The tax base for the basic debt is set as the minimum of the current basic value as well as the previous year’s basic value plus an adjustment percentage, also called the basic tax ceiling. The adjustment percentage is calculated annually and is between three and seven percent.
The property tax may well increase, even if it is a tax stop. However, there is a limit to how much the calculation basis can increase. The increase is determined each year by the Ministry of Finance and may not exceed 7 per cent compared with the previous year.
Increase or decrease in the basic value
If the basic value increases, the basis for collecting the basic debt can also increase, but only with the adjustment percentage. If the basic value falls, the basis for collecting the basic tax may still increase, as long as last year’s tax base regulated by the regulatory rate, also called the basic tax ceiling, is below the current assessment.
Public real estate appraisal suspended
The now former property valuation has been suspended. Therefore, if you need to see your current property valuation, it is reflected in your annual statement. It is also possible to look up the property valuation on GFI’s register.
If no major changes have been made to your property, a new public property assessment of your property will not be carried out until 2018 at the earliest. Until then, your property assessment will be valid from 2011, unless you have since received a reassessment.
The real estate appraisal can have a bearing on family trades because, in principle, 85 per cent of the property appraisal can be traded instead of the market price. In addition, registration fees must be paid at family trades or in connection with other transactions between interested parties of the property valuation, if it is higher than the transfer price.