Tax when you rent out houses and properties

Here we’ll let you know how to handle your taxes when you rent out a residential property, an apartment, holiday home or other forms of property in Norway or abroad.

The information is meant for tax residents in Norway and tax residents in other countries who own property in Norway that is rented out. 

Find out what applies to you

You must answer 2 to 9 questions to enable us to provide you with the information relevant to you.

Expenses and deductions

Whether rental income is tax free or taxable depends on, among other things, what kind of property you rent out.

Usually, you pay 22 percent tax on your surplus.

The rental activity can be considered business activity

Find out whether the rental acitvity should be considered business activity. Any surplus will be taxed at a rate of up to 50.6 percent.

When the rental income is taxable, you can claim a deduction for deficits if your expenses exceed the income.

You cannot claim a deduction for expenses related to short-term rentals of your own home or holiday home that you use yourself.

You may only claim a deduction for expenses related to maintenance.

That is, expenses related to work performed to restore the property to its former condition.

Expenses related to work that improves the property or alters the house are considered upgrades.

  • You cannot claim deductions from the rental income for expenses related to upgrades.
  • Upgrades can be added to the input value of the property.

If the property was previously of a normal standard and is upgraded to a high standard, the expenses related to the difference between normal and high standard will be considered an upgrade.

  • Performing repairs to the same standard as before.
  • Painting the house/rooms if they were previously painted.
  • Replacing floors/wall panels, windows, etc. to maintain the same standard as before.
  • Sanding parquet flooring.
  • Replacing pipework.
  • Replacing the water heater with one of an equivalent size.
  • Replacing a bathtub, mixer taps and ordinary taps to maintain the same standard as before.
  • Replacing kitchen fittings with new ones that are, by today’s standards, considered to achieve the same standard as before.
  • Maintenance of a previously tarmacked road/courtyard.

  • Painting the property for the first time.
  • Demolishing and moving a wall to make a larger room.
  • Extending the electrical installations/pipework.
  • Installing a fireplace.
  • When replacing a wood-burning stove with a pellet-fired stove, the added cost associated with the purchase and installation of the pellet-fired stove will be considered an upgrade.
  • If a bathroom is moved to a different room in the house, it’s considered an upgrade. The replacement of an old bathroom with one of the same standard as before will be considered maintenance.
  • Putting down tarmac for the first time.
  • Prepare a plot of land for building (water, water supply, road and electricity).

The limitations below do not apply if you buy a residential property/holiday home that’s only used for renting out and not by yourself.

The two limitation rules below will apply if you now have rental income that’s taxable in its entirety, but you have done the following in the five previous years:

  • you’ve lived in the residential property and did not rent out any part of it
  • you’ve rented out the residential property, but none of the rental income was taxable
  • you’ve been taxed for renting out your own home as a short-term rental (standard)
  • you’ve used it as your own holiday home and did not rent out any part of it
  • you’ve rented out your own holiday home, but the rental income has been taxed according to the standard method

If could also be necessary to limit your right to deductions for maintenance expenses in cases where there’s a transition from your own use of the residential property to a situation where the property is vacant while awaiting taxable income (accounts based assessment). 

1. Limitation when renting out your property under 6 months in the first year

If you rent out the property for less than 6 months the first year, you cannot deduct any maintenance costs at all for the first rental year.

2. Limitation of the deduction in the first five years

If you rent out for more than 6 months the first year, you can claim a deduction for maintenance expenses for the first NOK 10,000. For expenses over NOK 10,000, the deduction is limited according to the following rates: 

Deduction for maintenance expenses: 

Number of years of tax-exempt assessment during the last five years:

The deduction for maintenance expenses:

5 years

NOK 10,000 + 50% of the amount exceeding NOK 10,000

4 years

NOK 10,000 + 60% of the amount exceeding NOK 10,000

3 years

NOK 10,000 + 70% of the amount exceeding NOK 10,000

2 years

NOK 10,000 + 80% of the amount exceeding NOK 10,000

1 year

NOK 10,000 + 90% of the amount exceeding NOK 10,000

0 years

Full deduction
Example
You own a residential property that you have lived in yourself for more than 5 years and from which you have not previously had taxable rental income. The property is now to be used as a rental property.
  • In year 1 you rent out more than half the residential property for 8 months, and the rental income is more than NOK 20,000 in the calendar year. The rental income is therefore taxable.
  • You also rent out the entire residential property in year 2.
  • The maintenance expenses in year 1 amount to NOK 100,000.
The deduction in year 1 will then be NOK 10,000 + (50 percent x 90,000), amounting to (10,000 + 45,000) NOK 55,000.
If the maintenance expenses are the same in year 2, the deduction will be NOK 10,000 + (60 percent x 90,000), amounting to (10,000 + 54,000) NOK 64,000.

Please contact us if you want to know more about limitations to the entitlement for deducting maintenance expenses.

You can claim a deduction for the municipal taxes you pay for the residential property you rent out.

If you pay property tax on the rented-out property, you can also claim a deduction for that.

You cannot claim a deduction for wealth tax on the property you're renting out.

You can claim a deduction for home and contents insurance related to the property you rent out.

You can deduct expenses for advertising your rental property. You can also deduct expenses for rental services and viewings to find tenants. 

 

If you pay ground rent for the plot your rental property stands on, you can deduct the ground rent. Ground rent is paid to the landowner if you do not own the plot yourself.

You can deduct costs for electricity, heating, and cleaning related to the rental property, if you pay for these yourself. It’s assumed you pay these costs if they’re included in the rent.

You can also deduct the cost of cleaning products you’ve paid for.

You can deduct wear and tear on furniture and home contents.

Some purchases can be deducted immediately. Others must be depreciated, which means you deduct the cost over several years. Depreciation reflects the loss in value as the item is used and worn.

Deduction in the year of purchase

If you rent out a furnished property, you can deduct the full cost of furniture and home contents in the year of purchase if:

  • they’re mainly purchased for use in the rental property
  • they lose value due to wear and tear and/or ageing
  • they have an input value of less than NOK 30,000 or a useful life of less than three years
Example of deduction in the year of purchase:
If you buy a bed for NOK 27,000, you can deduct the full amount in the year of purchase. The same applies if you buy a snow shovel for NOK 700.

Depreciations

If the cost of furniture or home contents is NOK 30,000 or more, you can use declining-balance depreciation (depreciation group D, rate 20 percent). In practice, the balance never reaches zero, but when the remaining value is below NOK 30,000 (before depreciation for the year), you can deduct the full remaining amount.

Example of depreciation:
If you buy a couch for NOK 50,000 in year 1, you can claim a deduction for depreciations amounting to (50,000 x 20 percent) NOK 10,000 in the first year.

In year 2, the residual value is (50,000 – 10,000) NOK 40,000, you can claim a deduction for the year's depreciations amounting to (40,000 x 20 percent) NOK 8,000.

Exemptions from depreciation

If you rent out the property fully furnished for less than three years and use the furniture yourself before and after the rental period, you can deduct 15 percent of the gross rental income instead of using depreciation.

Example of how deductions are calculated:
You rent out your furnished residential property for two years.
The agreed annual rent is NOK 200,000.

Instead of declining-balance depreciations, you can claim a deduction for depreciations amounting to (200,000 x 15 percent) NOK 30,000 in both year 1 and year 2 (in total, NOK 60,000).

  • You may claim a deduction for common expenses that you pay to the housing association or the jointly owned housing company where your rental property is located.
  • You cannot claim deductions for payments of common debt. If these payments are included in the common expenses, you must deduct them from the common expenses before you claim the deduction in your tax return.
  • Interest on common debt is not deductible when calculating the taxable rental income.

You can claim deductions for travel expenses related to the rental, such as viewings, maintenance, and inspections. If the rental is not considered a business, you can deduct actual costs. If the rental is not considered business activity, you can deduct actual expenses. If you use a private car, you can deduct based on the rate for business travel.

If the rental is considered a business, you can deduct travel expenses according to the general rules for travel to/from work and work-related travel. If you make up to 10 trips per year to a rental property or need to stay overnight, the travel is considered work-related. If you travel more than 10 days per year without overnight stays, it is considered as travel to/from work.

If you’ve set up a security deposit account in connection with the rental, you can deduct the account fee.

You may claim a deduction for expenses related to surveys of the rented-out residential property when reporting information about the area in order to assess the taxable value of your property.

You can claim a deduction for the value of your own work effort if you carry out maintenance work on your rental property. However, this presumes that the same amount has been entered as income in your tax return in the same year that you carried out the work. This is because the value of the work you carry out is taxable. You can only claim a deduction for this in the same year that you carried out the work. 

The value of the work you carry out must be set to what it would have cost to have work of the same quality performed by others. The hourly rate for non-tradesmen must generally be set lower than what a tradesman would have charged, for example, to the hourly rate for unskilled labour. You can find the rates on the Norwegian Labour Inspection Authority’s website.

The value of the work you carry out related to upgrades cannot be deducted, but the value of such work can be added to the input value if you later sell the property. The value of the maintenance work you carry out cannot be added to the input value if you later sell the property.

 

Tax when you rent out commercial property

By commercial properties, we include property that’s used in its owner’s or tenant’s business activity.

Examples: shops, offices, warehouses, premise for industrial activity, parking garages, etc. Renting out residential properties and holiday homes can also be included in the owner's business activity.  

Renting out business properties

Indicative answer

Since we have not considered all the circumstances affecting your taxes, this response is only an indicative answer. It’s not a binding answer from us.

Taxable rental activity must be included in the tax return.

Important information

This guide does not necessarily cover all types of circumstances. You can find more detailed information about the applicable rules in the guide Skatte ABC (in Norwegian only).