Tax rules – letting part of your own home

If you let less than half of your own home, the rental income is tax-free. 

“Less than half” is determined by your home’s rental value on the free market. The size is not decisive in this case, but is often connected to rental value.

• As regards the part of your home that you yourself live in, the rental value is calculated according to a hypothetical rental income for long-term letting.
• For let area, the actual rental income must be considered rental value. This applies even if the owner uses the let area when it’s not being let.

If you let part of your home on a short-term basis, the rental income could easily be higher than when you let it on a long-term basis.

This means:

In order for the rental income to be tax-free, the letting must have a duration of at least 30 days, and the rental value of the part of your home that you let must be lower than the hypothetical rental value of the part you yourself live in. 

"More than half” is determined by your home’s rental value on the free market. The size is not decisive in this case, but is often connected to rental value.

• As regards the part of your home that you yourself live in, the rental value is calculated according to a hypothetical rental income for long-term letting.
• For let area, the actual rental income must be considered rental value.

If you let more than half of your own home, the size of the rental income determines the tax liability.

• If your annual rental income is of NOK 20,000 or less, the income is tax-free.
• If your annual rental income exceeds NOK 20,000, the income is taxable as of the first NOK.

The amount limit of NOK 20,000 only covers rental income for the period of the year in which all or a larger part of your own home is let. 

All rental income will be taxable if you exceed the amount limit of NOK 20,000. This includes income from periods where less than half of the home is let.

You have a house that's divided into a family apartment and a bedsit. The family apartment is 70 square metres and its rental value is NOK 70,000 per year. The bedsit is 30 square metres and its rental value is NOK 30,000 per year.

One year, you let the family apartment and live in the bedsit yourself. In this case, the let area has a higher rental value than the part you live in. The rental income is therefore taxable in its entirety since the annual rental income exceeds NOK 20,000.

However, if the family apartment or bedsit's let on a shorter-term basis of less than 30 days, then rental income linked to such short-term letting will be tax liable in accordance with a standard method. Read more about short-term letting.

You live in an apartment that has three bedrooms. All the bedrooms are the same size and standard. The apartment also has a living room, a bathroom and a kitchen. During term time, you decide to let two of the bedrooms to two friends (on a long-term basis), while you share a kitchen, bathroom and living room (shared housing).

When assessing the rental value of the area that you are letting, you must consider the rental value of the let area (two bedrooms with access to a shared living room, kitchen and bathroom) against a hypothetical rental value of the area you use for your own purposes (one bedroom with access to a shared living room, kitchen and bathroom). As the bedrooms in this example are of equal standard and size, it's clear that you are letting more than half of your own home, determined according to rental value.

If you have annual rental income of more than NOK 20,000, the rental income will be taxable from the first krone. Whereas rental income of NOK 20,000 or less will be tax-free.

If you have both short-term and long-term lets in the same property, the rental value of the part of the property that's let out short-term will be included in the assessment of whether the thresholds (more than half of one's own home calculated by rental value) for tax-free long-term letting have been exceeded.

Lars owns a detached property on two floors containing two housing units. He lives in the larger of the two himself, while the basement flat's let to Anita, who lives there all year. Anita pays NOK 9,000 per month in rent. In July, Lars goes on holiday for four weeks. During this period, he wants to let the  unit he lives in. Lars signs an agreement with a family who'll live there for three weeks for NOK 15,000.

Letting of the basement flat to Anita will normally be tax-free for Lars because the let applies to less than half of his own house. However, for the three-week period in July, more than half of the property will be let, calculated by rental value. For this period, the lettings must be assessed under the NOK 20,000 rule.

When assessing whether the NOK 20,000 threshold's been exceeded, account must be taken of all rental income in the three-week period in July, i.e.

• income from the basement flat of NOK 6,750 (9,000/4 x 3 weeks) and
• income from the short-term let of Lars' own home area of NOK 15,000

Overall, Lars has received more than NOK 20,000 for a period in which more than half of the property's let. This means that

• the entire income from the basement flat will be taxable from the first krone for the whole year, but that Lars can deduct costs related with this letting. While
• the income from the short-term let of Lars' own housing unit will be taxed according to the standard rule at a fixed standard allowance.

This also means that the costs associated with the property must be allocated to the correct part of the property and at the right time:

• Costs related to Lars' own housing unit for the time when he's using it himself are considered non-deductible private costs.
• Costs related to Lars' own housing unit for the time when it's let as a short-term let are included in the standard rule assessment, and aren't ordinarily deductible.
• Costs related to the property as a whole, such as property taxes, municipal charges etc. must be divided between the part for which an accounts-based assessment has to be made (in this case, the basement flat) and the remainder.

In a sectioned building, such as a sectioned semi-detached house, you're only entitled to tax-free rental income for the section where you live.

Rental income from multi-unit houses (those with three or more family apartments) will always be tax liable from the first krone. This also applies to any letting of your own housing unit. Properties with two family apartments and one or more independent bedsits are considered multi-unit houses.

Family apartment

In order for a housing unit to be characterised as a family apartment, the housing unit must normally be suitable for use as a permanent home for a family of two adults and one child. There's also a requirement that the housing unit can be locked and made inaccessible to others, and that it has a built-in bath and toilet, its own cooking facilities and at least one bedroom. A housing unit with primary rooms covering less than 40 square metres can't usually be considered a family apartment.

Independent bedsit

An independent bedsit is a housing unit with its own entrance and toilet. The unit isn't required to have a separate entrance to the building. If the unit shares a stairway or similar with other housing units, it will still be considered independent as long as it has a lockable door. The unit isn't required to have its own kitchen, bedroom or shower facility.