If you let all or more than half of your home for more than NOK 20,000 a year, all rental income for the whole year will be taxable (accounts-based tax assessment). This also applies to any rental income that would otherwise have been tax-free.
In the case of accounts-based tax assessment, you must submit RF-1189E Letting etc. of real property together with your tax return. In the form, you must present a summary of income and expenses linked to the letting. The net income must be entered under the tax return item 2.8.2.
A “large proportion” means that the rental value of the part you let is greater than the rental value of the part you use as your own home.
If you let a “small proportion”, i.e. the rental value of the part you let is less than the rental value of the part you use, you will not need to pay any tax.
QUESTION: When it says “If the rental income exceeds NOK 20,000, all the rental income from the property will be taxable”, does this amount include rental income from the letting of a small proportion of the property? Say I have let a small proportion of my property for NOK 15,000 and a large proportion of the property for NOK 25,000. Will the total taxable amount then be NOK 40,000 or NOK 25,000?
ANSWER: The total taxable amount will then be NOK 40,000.
See also the Tax ABC and the Directorate of Taxes’ statement of principles of 5 February 2016 concerning tax liability in connection with accommodation mediated via an online marketplace for more information.
Letting of secondary dwellings
The letting of secondary dwellings constitutes taxable income from the first krone. See Tax ABC.
Letting a holiday home
If you exclusively or partly use your holiday home for holiday purposes and you use the property to a reasonable extent over time, rental income up to NOK 10,000 will be tax-free (exemption treatment). Of the excess amount, 85 percent will be considered taxable income.
If your holiday home is considered to be a rental cabin (no exemption treatment), the rental income will be taxable from the first krone (accounts-based tax assessment). On the other hand, you will be entitled to deductions for your expenses. See the Guidance for RF-1189 (p. 2)
You must submit RF-1189E Letting etc. of real property together with your tax return. The net income must be entered in the tax return item 2.8.3
QUESTION: You let your cabin to a Swedish family one summer for three weeks. Price: NOK 9,000 per week. Total income: NOK 27,000. Will you have to pay tax on this amount?
ANSWER: Yes. If you let the property for NOK 27,000, NOK 14,450 will therefore constitute taxable income. (NOK 27,000 minus NOK 10,000 is NOK 17,000, and 85% of this NOK 17,000 is NOK 14,450, which will constitute taxable income.)
QUESTION: You lend your cabin/home to other people through a company which organises such loans, but transfers all tax liabilities to the participants. The company takes 20 percent; you keep the rest. Will you have to pay tax on what you earn? What if they have no link to Norway and only operate via an application (app)?
ANSWER: The income must be treated in the same way as in cases where the taxpayer organises the lending themselves.
Letting several holiday homes
If you let more than one holiday home, the limit of NOK 10,000 will apply per holiday home. You can therefore let three separate holiday homes for NOK 9,000 each and have a total rental income of NOK 27,000 without trigging any tax liability, provided the conditions for exemption treatment are met for each individual holiday home.
Depreciation and maintenance
QUESTION: What are the rules concerning depreciation when the sharing of a house is a business? Can I depreciate the value of the property against tax in full or in part? And what about expenses for maintenance and increases in value?
ANSWER: Depreciation will not normally be applicable when letting housing. If your letting of housing is taxable and the income is subject to accounts-based tax assessment, you will be entitled to a deduction for maintenance under the applicable rules. However, expenses for alterations and updating (improvements) do not give entitlement to any deduction. For more information about maintenance, see the Tax ABC .
QUESTION: I’ve heard that the limit for being considered an enterprise is the letting of four dwellings, is that correct? If so, does this apply to all combinations of primary dwellings, secondary dwellings and holiday homes, or are there exceptions?
ANSWER: For the rental cases, it can generally be assumed based on established practice that letting five housing units or more for residential or holiday purposes constitutes a commercial enterprise, but this is not an absolute rule. The letting of fewer properties may also constitute a commercial enterprise; see the 2016 Tax ABC “Enterprise - general”, section 3.3.12 , where the following is stated: “This will for example be the case when the taxpayer is very active, e.g. in connection with intensive short-term letting, inspection and cleaning of the premises or similar. The level of activity will often be high, particularly in the case of short-term letting for recreational purposes, with the result that commercial activity may be deemed to be taking place even if only one housing unit is being let.” The same applies if there are several rental agreements for a housing unit.
Letting in buildings which are treated as exempt under Section 7-2 of the Tax Act must be excluded from the assessment as to whether the other letting circumstances should be considered commercial activity.