Tax rules - sale of holiday homes in Norway
Gains made on the sale of holiday homes are exempt from tax if the conditions linked to the period of occupancy and ownership are met.
In practice, there are stricter requirements to substantiate recreational use of properties that are not typical holiday homes, e.g. town flats or other residential property in ordinary residential areas. You must be able to verify that you use the property primarily for recreational stays and activities, including contact with and care for family members.
Period of occupancy and ownership:
- You must have used the property as your own holiday home for at least five out of the last eight years (period of occupancy).
- The property is sold or sale of the property was agreed upon more than five years after it was purchased and more than five years after it was first used or constructed according to the certificate of completion (period of ownership).
Only the period of occupancy during your own period of ownership will count. The requirement regarding occupancy may be met for a number of holiday homes at the same time.
- Temporary use for other purposes: If the property is used for non-holiday purposes at certain times of the year, an overall assessment will decide whether the property should be considered a holiday home. For example, if the property is let as a permanent home for part of the year, the property may lose the character of a holiday home because the use of the property as a permanent home will be more extensive than your holiday use. This means that the sale of the property will be covered by the rules for selling residential properties.
Occasional letting will be of no importance provided the property is otherwise used as a holiday home to a normal extent and has not become a rental cabin. - Simultaneous use of one part of the property as a permanent home and another part as a holiday home: If the property is used as a permanent home by another owner or tenant, the property will soon lose the character of a holiday home because of the use of the property as a permanent home. This will cause the property to be covered by the rules for selling residential properties.
- Different uses of the entire property by different owners/right holders: If a property is owned by several people and some of them use it as a permanent home while others use it as a holiday home, the use as a permanent home will soon lead to the property losing the character of a holiday home, even for the joint owners who use it for recreational purposes.
Wealth taxation of housing
Wealth taxation of residential properties is generally based on the property’s registration in the land register (the country's official register of real estate). This means that a property that is registered as permanent dwelling and that is not your primary dwelling (the one you normally live in) will usually be considered a secondary dwelling when calculating wealth tax.This applies even if you actually use the property as a holiday home during holidays and your free time.
Tax rules in the event of sale
However, what the property is registrated as in the land register, does not affect the tax liability when selling residential/holiday properties. In this case, the decisive factor is the actual use. If you use a property (which is considered a secondary dwelling for wealth tax purposes) for recreational purposes to a reasonable extent, then the rules for the holiday properties apply.
The tax rules applicable to selling holiday properties will therefore apply if you sell a house in a rural area, a farmhouse on a disused farm or an apartment in a town or city as long as the property is used as a holiday home.
In practice, there are stricter requirements for substantiating holiday use of properties that do not appear to be typical holiday homes. You must be able to substantiate that you use the property for recreationally oriented stays and purposes, including family gatherings and supervision, to a significant extent.
Please do not hesitate to contact us if anything is unclear.