Gains/losses made on the sale of housing, holiday homes and plots of land

You can deduct losses made on the sale or other realisation of housing or holiday homes in cases where any gain would have been taxable. You should note that different requirements apply to period of ownership and period of occupancy/use for housing and holiday properties respectively.

If you have owned housing for 12 months or less or lived there permanently for less than 12 months during the past 24 months, you can deduct any loss in your tax return.

If you have owned a holiday property for five years or less or not used it as your own holiday property in five of the past eight years prior to the sale, you can deduct any loss in your tax return.

Losses on the sale of plots of land are deductible.

Calculating the gain or loss on the sale of housing, holiday homes and plots of land

If the sale of the property is not covered by the tax exemption rules, any gain will be taxable and any loss will be deductible. In such cases, you must calculate the gain or loss and enter it in your tax return. The gain or loss is the difference between the output value (the sale price) and the input value (the purchase sum/cost price).

For information about the calculation of gains/losses on the sale of property inherited or received as a gift, see "Sale of property inherited or received as a gift".

What is considered to be the output value (sale price)?

The value of everything you receive upon sale or other realisation is considered to constitute the sale price. This applies regardless of whether it falls to the seller or is received by others on his behalf. The sale price normally consists of cash, receivables on the outstanding purchase sum and the take-over of the seller's debt.

Expenses in connection with the sale, e.g. estate agent's commission, advertising costs, etc. can be deducted from the sale price.

What is the input value (purchase sum/cost price)?

The input value consists of the original cost price/purchase sum and other expenses attributable to the purchase or take-over. Other expenses could for example include document charges, registration fees and expenses for an estate agent, etc. In addition, improvements made during your period of ownership should also be added to the input value. 'Improvements' means work which alters or improves the condition of the property compared with its previous condition.

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.

Maintenance expenses are not included in the input value. Maintenance, including repairs, is work that is carried out to restore the property to the condition in which it existed previously under either the current or a previous owner. More examples of the distinction between maintenance and additions

Example:

In 1999, Kari Nordmann bought a residential property for NOK 750,000. She also paid NOK 18,750 in document charges and NOK 750 in registration fees. She also incurred expenses of NOK 50,000 for alterations which are considered to constitute improvements. She has always let the property, so when she sold it a few years later for NOK 1,250,000, the gain was taxable. In connection with the sale, she incurred NOK 37,000 in expenses for an estate agent, advertising, etc.

Purchase sum in 1999 NOK 750,000
+ Document charges NOK  18,750
 + Registration fees NOK     750
+ Improvements NOK  50,000
= Input value in 1999 NOK 819,500
   
Sale price the year of the sale NOK1,250,000
 – Sales expenses NOK    37,000
= Fee the year of the sale NOK1,213,000
   
Taxable gain:  
 Sale price NOK1,213,000
 – Input value NOK   819,500
= Gain on the sale NOK   393,500

The gain of NOK 393,500 must be entered in the tax return and will be taxed as general income at the rate of 25 percent the year of the sale. It will be NOK 98,375. 

Calculating gains or losses on the sale of apartments

If you sell an apartment in a housing cooperative (usually a housing association or a limited liability housing company) without the requirements concerning period of ownership and occupancy being met, you must calculate any taxable gain or deductible loss. The gain or loss made on a sale must be calculated based on the gross values of the apartment at the time of purchase and sale respectively. Before you can calculate the gain or loss, you must calculate the gross value of the apartment. You must calculate two gross values for the apartment: one as at the time of purchase and one as at the time of sale.The gross values of the apartment as of 1 January in the year of purchase and sale respectively based on the cooperative's accounts as of these dates should normally be used as a basis.

The gross value is determined as follows:

The apartment's transfer sum

+ The apartment's share of the cooperative's joint debt

- The apartment's share of the cooperative's assets*) not included in the housing cooperative's tax value

= Gross value of the apartment

*) The 'cooperative's assets' means capital other than the capital value of housing units which are valued in accordance with the rules for residential properties or assets which are not covered by the cooperative's tax value (holiday home cooperatives). For example, the housing cooperative may have outstanding receivables, securities, cash and bank balances and unutilised plots of land. Information concerning the apartment's share of this must be reported to the Norwegian Tax Administration by the housing cooperative and be precompleted under item 4.5.3 of the tax return "Share of capital in housing cooperatives". Each year, you will receive an annual statement from the housing cooperative showing the unit owner's/shareholder's shares of the housing cooperative's fiscal income, expenses and debt for the income year.

When you have calculated the gross values, the gain/loss must be calculated in the same way as for other properties.

Example:

In 1999, Petter purchased an apartment for NOK 450,000. He also took over a share of joint debt of NOK 120,000. The apartment's share of the housing cooperative's assets, such as bank balances and securities, amounted to NOK 15,000. He also had to pay NOK 2,000 in transport fees to a contractor, as well as the estate agent's commission of NOK 10,000. During his period of ownership, he spent NOK 20,000 on improvements to the apartment, as well as NOK 50,000 on maintenance.

The apartment's gross value and input value at the time of purchase in 1999 were as follow:

Purchase price NOK  450,000
+ Share of joint debt NOK  120,000
– Assets in the cooperative NOK    15,000
 = Gross value of the apartment in 1999 NOK  555,000
 + Purchase expenses NOK    10,000
+ Transport charges NOK      2,000
 + Improvements NOK    20,000
= Input value in 1999 NOK  587,000

Several years later, he sold the apartment for NOK 1,100,000. The share of the joint debt which the buyer took over at the time was NOK 90,000 and the apartment's share of the cooperative's assets in securities, bank balances, etc. amounted to NOK 20,000. At the time of the sale, he had incurred NOK 35,000 in expenses for estate agent fees and advertising, etc. He had always let the apartment, so the gain would be taxable.

The apartment's gross value and sale price at the time of the sale in the year of sale were as follows:

Sale price NOK 1,100,000
+ Share of joint debt NOK      90,000
– Assets in the cooperative NOK      20,000
= Gross value of the apartment at the year of the sale NOK 1,170,000
 – Sales expenses NOK      35,000
 = Sale price NOK 1,135,000
Taxable gain:  
Sale price  NOK 1,135,000
– Input value in 1999 NOK    587,000
 = Gain NOK    548,000

The gain of NOK 548,000 must be entered in the tax return for the year of the sale and will be taxed as general income at the rate of 25 percent, i.e. NOK 137,000.