Wealth tax on leased plots for housing and holiday homes

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All lessees of residential and holiday home plots have an unconditional right to have their leasehold agreement extended. This means that all leases relating to residential and holiday home plots are considered to be perpetual (ever-lasting) rights.  

Special tax rules apply to such leaseholds. These rules also apply to joint owners of property and shareholders in housing associations with one or more buildings on leased land.

Leased plots of land for houses

The value of the leasehold plot is included in the tax values for residential properties. You are entitled to a deduction for debt for the capitalised obligation to pay ground rent.

Leased plots of land for holiday homes

As a lessee, you will be liable to wealth tax as if you were the owner of the land. The value of the plot must therefore be included in the tax value of the building or buildings. The capital value of the property (including the plot of land) must be entered under item 4.3.3 of the tax return.

If the supplement for the plot has not been included in the pre-completed tax value for 2015, you must increase the pre-completed amount by the standard wealth supplement for the plot under item 4.3.3 of the tax return.

The supplement for the plot of land was set according to the standard rates, at 10 times the annual ground rent for 2008.  Between 2009 and 2015 the assessment value of holiday homes have been subject to universal increases amounting to 40 per cent. This means the supplement in 2015 amounts to 14.64 times the annual ground rent for 2008. Since the assessment value of holiday homes will not be universally adjusted neither for the income year 2015 or 2016, the supplement in 2015 and 2016 amounts to the same as the supplement for 2014.

You are entitled to a deduction for debt for the obligation to pay ground rent (capitalised ground rent). For 2015, this deduction for debt is ten times the annual ground rent. If the ground rent changed during the year, use the rent that applies at the end of 2015. Enter the deduction for debt under item 4.8.1 of the tax return.

Example:

The tax value of the building(s) of NOK 200,000 is entered in the tax return. In 2008, the ground rent was NOK 15,000. The tax value of the property will then be the original tax value (NOK 200,000) plus the standard supplement for the plot (NOK 15,000 x 14.64 = NOK 219,600), i.e. NOK 419,600. You must therefore enter NOK 419,600 as the tax value under item 4.3.3. You are also entitled to a deduction for debt for the capitalised obligation to pay ground rent. If the ground rent for 2015 was NOK 20,000, you must enter NOK 200,000 as a deduction under the debt item 4.8.1.

Owners of units in jointly owned housing properties

For owners of units in a jointly owned housing property with a building or buildings on leased land, the deduction for debt will have been pre-completed correctly if the jointly owned property has submitted statements for use in the tax assessment to the tax authorities. See item 4.8.1 of the tax return. The individual owners must themselves increase the tax value in item 4.3.3 in accordance with the guidelines above. You must obtain information about your share of the ground rent for 2008 from the jointly owned property. 

Owners of units in housing cooperatives

For owners of units in a housing cooperative with a holiday home in a building or buildings on leased land, the deduction for debt and the tax value will have been pre-completed correctly as the housing cooperative must perform the calculations referred to above. See the statement from the cooperative and items 4.3.3 and 4.8.1.

Excessively high tax value

If the supplement for the plot results in the property’s tax value significantly exceeding the valuation level for comparable properties elsewhere in the municipality, or 30 percent of its market value, you can ask for it to be reduced. See how to demand reduction.

Lessors

Lessors are not liable to wealth tax on the value of the leased land. Instead, the lessor is liable to wealth tax on his/her right to charge ground rent, i.e. the capitalised value of the ground rent. For 2015, this amount is ten times the annual ground rent. If the ground rent changed during the year, use the rent that applied at the end of the year. The lessor must enter the capitalised value of the ground rent under item 4.5.4 of the tax return.

Lessor who have not entered capitalised ground rent as a separate capital item in their tax return must do so. They must also reduce the pre-completed tax value of the property under item 4.3.5 of the tax return, so that the value of the leased plot is no longer included in the tax value. If the whole property is leased, the whole tax value shall be deleted. If only part of the property is leased, the tax value must be reduced proportionately.

If only part of the property is leased, the tax value must be reduced as follows:

If a tax value has previously been determined for the leased plot, but such that the tax value is included in the total tax value of the property, you must deduct the tax value of the leased plot. The value you deduct must be proportionate in order to take into account any percentage-based adjustments to the tax values during the years since the tax value was determined. If the value of the leased plot amounted to 20% of the tax value of the entire property at the time the tax value was determined, the reduction must be 20% of the tax value of the property for the 2015 income year.

If the capital value (tax value) of the leased plot has not specifically been determined previously, you must reduce the tax value of the property by the capitalised value of the ground rent for the leased plot. If the reduction in accordance with this point results in the tax value of the remaining (unleased) part of the property being lower than that of other similar properties, you must enter a new tax value which corresponds to that of similar properties and which does not exceed 80% of the verifiable market value. Give information on the change under item 5.0 (Additional information) of the tax return. The tax office can set a new tax value.

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