3.3.6 Deductible loss on the sale of real property

Item 3.3.6 Applies to the tax year 2016

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Under this item, you must enter your calculated loss on the sale of real property, such as housing and plots of land. The general rule is that you will be entitled to a deduction for your loss if any profit you had made would have been taxable. The period of ownership and period of occupancy determine whether or not it is taxable. Any profit must be entered under item 2.8.4.

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Plots of land

If you sell a plot at a loss, you must enter the deduction for this under this item. Losses on the sale of plots are always deductible.

Housing

If you have sold a house/apartment at a loss, you may be entitled to a deduction if you have:

  • used it as your own home for less than 12 out of the last 24 months (period of occupancy)
  • and/or owned the house/apartment for less than one year (period of ownership). The period of ownership is calculated from the date on which you took over the property, or began using it, or the date on which it was completed, until the date on which you accept an offer for the property.

You may have been unable to use the property for a particular reason, such as work, illness or injury, which has prevented you from meeting the requirement concerning period of occupancy, but you can still have your occupancy of the property approved.

Holiday homes

If you have sold a holiday home at a loss, you may be entitled to a deduction if you have:

  • used it as your own holiday home for less than five out of the last eight months (period of occupancy)
  • and/or owned the holiday home for less than five years (period of ownership). The period of ownership is calculated from the date on which you took over the property, or began using it, or the date on which it was completed, until the date on which you accept an offer for the property.

You may have been unable to use the property for a particular reason, such as work, illness or injury, which has prevented you from meeting the requirement concerning period of occupancy, but you can still have your occupancy of the property approved.

Commuter accommodation

If you have sold a dwelling which you have not used as commuter accommodation in 12 of the last 24 months and/or owned it for less than one year, any loss that you incur upon selling the property may be entered as a deduction. If you in addition to your own residential own a commuter accommodation, you can fill in the time lived in both the dwellings at the same time.

Break-up of relationships

In the event of a break-up in a relationship between spouses or spouse-equivalent partners with joint children, the person who moves out will accrue occupancy time in the same way as the person who remains in the home.

Several owners

If you have more than one owner of a home that sold at a loss, the loss should be assessed for each individual owner and distributed in proportion to your respective ownership shares.

Division of the property

If the property has a larger area than is considered to constitute a naturally associated plot, the sale of the property may be considered as the sale of housing/holiday home and plots. Loss on the sale of plots are always deductible.

If the sale concerns a number of free-standing buildings, consideration must be given to whether each building has sufficient affiliation to the dwelling in order to be considered part of the dwelling.

If you have used part of the dwelling as your own home and the rest as a taxable rental dwelling, each part must be considered separately. You can enter losses on the sale of the rental part as a deduction. You can enter losses on the sale of the part that has been used as your own home as a deduction if you have not used it as a dwelling for 12 of the past 24 months and/or owned it for less than one year.

How do I enter this in my tax return?

You must fill in the municipality to which the property belongs, the holding number, subholding number and the calculated loss amount. You also need to add an overview of the estimated loss. You can use the form for the sale of housing, home or plot Skjema for salg av bolig, fritidsbolig eller tomt RF-1318 (in Norvegian only). The form is not an attachment form in the tax return, and therefore can not be filled directly in altinn. However, you can print the form, scan it in and submit it in the return as an attachment.

Remember not to put "–" before the number when you submit electronically. You will receive a 25 percent deduction on the loss.

Calculating losses on the sale of real property

You must calculate the loss by taking:
  output value
- input value
=   result

If the result is a positive amount, you should enter it under item 2.8.4, but if it is negative, it should be entered under item 3.3.6 as a deduction.

Input value

This is the amount you paid for the property when you purchased it, or the value of the property when you inherited it. In addition, you can add certain costs that are attributable to the purchase and sale of the property, such as:

- estate agent expenses

- improvements (excluding maintenance)

- document charges associated with sale

- registration fees

So
      what you paid for the property
+    expenses
=    input value

If you built the dwelling yourself, the cost price will form the starting point for the input value. This covers both the expenses attributable to construction of the dwelling and the costs of purchasing and preparing the plot for construction. The value of your own work linked to newbuilds or improvements can also be added to the input value. The value of your own work should be set to what it would have cost to have work of the same quality performed by others. The hourly rate for non-tradesmen must generally be set lower than what a tradesman would have charged, e.g to the hourly rate for unskilled labour. The rates can be found on the Norwegian Labour Inspection Authority’s website.

If you inherited the dwelling after 2014, the basis for the input value will be either the testator's input value (in the case of continuity) or the estimated market value at the time you inherited the dwelling (in the case of discontinuity). The market value at the time of inheritance will form the basis for the input value if the testator met the residential and ownership period requirements at the time of inheritance, and the property is a dwelling or holiday property. For more information on discontinuity and continuity, see here. In the case of ordinary farms and forestry, the conditions in Section 9-13 of the Tax Act must be met.

Output value

What you sell the property for.

Log in and fill in the item. 

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Documentation requirements

You do not need to send us any documentation for this, but you must be able to present documentation if we ask for it.

You must be able to present the loss calculation if we ask for it. This also applies to the documentation of purchases, expenses, improvements and costs.

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