Gains and losses on the sale etc. of real property abroad
Are you intending to sell a residential property or holiday home abroad? Contact the tax office to find out more about your tax obligations in Norway and whether there is a tax treaty with the country in which the property is situated.
Gains made on the sale of real property abroad will generally be taxable to Norway under the same rules as apply to real property in Norway. There are for example rules concerning tax exemption based on period of ownership and period of occupancy/use. Losses on the sale of real property abroad are only deductible in Norway in cases where any gain would have been taxable in the country. Real property abroad includes your own home and any holiday homes. Time-share apartments may also be real property.
When you sell real property abroad, any gain will often be taxable in the country in which the property is situated under the same rules that apply there.
Norway has entered into tax treaties with many countries. These treaties contain rules concerning how you can avoid the same income being taxed in both countries. Gains made on the sale of real property in a country with which Norway has a tax treaty will normally be taxed in full in the country in which the property is situated, under the rules that apply there.
Some tax treaties state that any gain on a sale must be taxed in both Norway and in the country in which the real property is situated. In such cases, tax that is paid abroad can be deducted from the Norwegian tax on the gain. This applies for example when the property is situated in Denmark, Finland, France, Spain or Sweden. The same applies when no tax treaty has been established with the country concerned.
If you claim a deduction from your Norwegian tax for tax that you have paid abroad, you must fill in form RF-1147E "Deduction for tax paid abroad by a person (credit) for salary recipients, pensioners and self-employed persons" and enclose it with your tax return. You must also document the amount of tax that you have paid abroad on the gain.
Other tax treaties state that any gain made on the sale of real property in the other country must not be taxed in Norway. In such cases, you will not be entitled to claim a deduction for any losses you incur. This applies for example when the property is situated in Belgium, Italy and Croatia.
Example: Sale of holiday home in Sweden
In Sweden: The taxable gain will be calculated according to Swedish rules and taxed in Sweden.
In Norway: The obligation to pay tax will be assessed under Norwegian rules. If you have owned and used the holiday home for long enough to fulfil the conditions for tax-free gains in the event of sale, the gain will be tax-free in Norway. You will then not be entitled to claim a deduction in Norway for the Swedish tax paid on the gain. If the gain is taxable, it will be calculated according to Norwegian rules and taxed in Norway. You will then be able to claim a deduction for the tax you have paid in Sweden against the Norwegian tax on the gain.
As the taxable gain is calculated according to Swedish rules in Sweden and Norwegian rules in Norway, the amounts that are taxable in Sweden and Norway will differ.