Loans and interest rates
You will normally be entitled to claim a deduction for all the interest that you have paid on your loans during the income year. You enter the deduction for interest on debt in the tax return.
Does this concern me?
This item concerns everyone who has paid interest on debt and/or penalty interest to a credit institution in Norway, as well as everyone who has received the benefit of low interests on a loan from an employer.
You can also claim a deduction for:
- expenses associated with the taking out of loans, including establishment fees,
- financing expenses in connection with the conversion of loans to obtain lower interest rates, including expenses for a valuer,
- housing cooperative fees linked to the special repayment of IN loans (joint debt with individual repayment entitlement)
- interest on loans from an employer or private lender (e.g. family members),
- penalty interest on interest on debt, and interest and charges paid in connection with credit purchases, interest on loans abroad.
You cannot claim a deduction for interest for:
- interest which was due for payment, but which you did not pay during 2018 (unless the interest pertains to a business with a bookkeeping obligation). You will not be entitled to deduct such interest until the year in which you actually pay it. In the case of student loans from the Norwegian State Educational Loan Fund (Låneskassen), deductions are also only allowed for interest that has actually been paid.
- debt collection charges and expenses in connection with debt collection,
- interest surcharges on underpaid tax (does not apply to penalty interest).
How to enter this in your tax return
The tax return will be pre-completed with interest and deductible expenses you have paid to the bank. Enter any interest on private loans.
The amounts you should perform the check against should be shown in the annual statement you will receive from your lender(s) in January. If the amount is wrong, you must correct the tax return. You should also contact the lender you have borrowed money from to ensure that the annual statement is correct.
You do not need to send us any documentation for this, but you must be able to present documentation if we ask for it. If you alter, delete or add information concerning interest on debt, you must be able to document this through an annual statement or confirmation from the credit institution if we ask for it.
Distribution of interest on debt between spouses/spouse-equivalent partners/joint borrowers
Even if you have a loan jointly with someone else, it will only be reported by the bank for one person. The way in which you can distribute it will depend on whether or not you are married.
This distribution must be repeated every year in the tax return and both people concerned must make the change. The total amount must be the same regardless. For example, if interest on debt is reduced by NOK 10,000 by one person, it must be increased by NOK 10,000 by the other person. You must alter or add information on the lender, debt, interest on debt and the reason for the change.
Married couple with a joint loan
A married couple with a joint loan where the bank reports this in the name of only one of them, can allocate deductions for debt and interest between them as they wish. This applies regardless of how the bank reports the loan and/or the actual division of liability for the loan between the couple. It does not matter which of them has actually paid the interest on the loan.
Co-habiting couple with a joint loan
Both partners must change their tax returns if they are an unmarried, co-habiting couple with a joint loan, where the bank reports the loan in the name of only one of them. They must divide the deduction for debt and interest between them in proportion to their actual loan liability with respect to the bank. It does not matter which of them has actually paid the interest on the loan.
Break-up of relationships
If your previous partner does not wish to alter the debt and interest on debt, you can do so in your tax return. If you were spouse-equivalent cohabitants, you must also check that you are also no longer stated as cohabitants in your tax return.
Loan from employer
The benefit of low-interest loans from an employer will normally be pre-completed based on information reported by your employer, so you should check that everything is correct. The amounts you should perform the check against should be shown in the Certificate of Tax and Pay Deducted (also known as an annual statement) that you receive from your employer in January. If the amount is wrong, you must correct the tax return. You should also contact your employer to ensure that the annual statement is correct.
In the case of certain credit purchases, there are limitations on the amount that can be deducted
Certain formal conditions and limitations on the amount that can be deducted apply to credit purchases. For each agreement concerning a credit purchase which is covered by the provision in the regulations, the deduction is limited to a rate of 17percent effective interest. The limitation does not apply in connection with account purchases where the creditor is a bank or financing enterprise. See the Assessment ABC for more information on this.
Companies' interest deductions on loans from associated parties
Companies, etc. can not deduct all their interest expenses from associated parties in connection with the assessment of their income.