Calculating gains and losses – sale of housing or holiday home abroad

In 1999, Kari Nordmann bought a house in the country in Sweden for NOK 750,000. She also paid NOK 18,750 in a form of document duties and NOK 750 in registration fees. She also incurred expenses of NOK 50,000 for alterations considered to be improvements. She has always let out the house, so when she sold it a few years later for NOK 1,250,000, the gain was taxable. When selling the property, she incurred NOK 37,000 in expenses for an estate agent, advertising, etc.

Purchase price in 1999	NOK 750,000
+ Document duty	NOK 18,750
+ Registration fees	NOK 750
+ Improvements	NOK 50,000
= Input value in 1999	NOK 819,500

Sale price in the year of sale NOK 1,250,000

– Sale expenses NOK 37,000 
= Output value in the year of sale NOK 1,213,000 

Taxable gain:

Sale price	NOK 1,213,000
– Input value	NOK 819,500
= Gain on the sale	NOK 393,500

 

The gain of NOK 393,500 must be entered in the tax return and will be taxed as general income at the rate of 22 percent, which means that the tax payable on the gain in this example is NOK 86,570.

You will find information on calculating gains/losses made on the sale of property which has been inherited or received as a gift here.

If you intend to sell housing or a holiday home and the conditions for tax exemption aren't met, you must perform a gain/loss calculation. Such a calculation is based on the difference between the output value (sale price) and the input value (cost price).

If you intend to sell a property that you've owned since before 1 January 1992, you can adjust the input value upwards in accordance with certain rules and rates. In the case of residential property or a holiday home purchased after 1 January 1992, the input value can't be adjusted upwards in accordance with these rules.

If the property was purchased over a number of years, or improvements were made during 1990 or earlier, each year's incremental increase of the input value must be adjusted upwards separately. For example, if you spent NOK 50,000 on improvements to the dwelling in 1985, you must adjust this amount upwards by the rate for 1985 and add this value to the input value of the property.

The total input value can't be adjusted upwards to an amount that is higher than the proceeds of sale. The amount of upward adjustment therefore can't result in you being entitled to a deduction for any loss on the sale; it can only reduce or eliminate any gain.

The input value as of 31 December 1991 is set to the original cost price with a percentage increase in accordance with the following table:

Year of purchase	Percentage rate for upward adjustment of input value	Year of purchase	Percentage rate for upward adjustment of input value
1990	3	1967	200
1989	6	1966	210
1988	10	1965	220
1987	16	1964	230
1986	22	1963	240
1985	28	1962	250
1984	36	1961	260
1983	42	1960	270
1082	50	1959	280
1981	60	1958	290
1980	70	1957	300
1979	80	1956	310
1978	90	1955	320
1977	100	1954	330
1976	110	1953	340
1975	120	1952	350
1974	130	1951	360
1973	140	1950	370
1972	150	1949	380
1971	160	1948	390
1970	170	1947	400
1969	180	and earlier	400
1968	190

Example

In 1979, Ola purchased a holiday home in Sweden for NOK 500,000. He incurred purchase costs (e.g. a form of registration fee, etc.) of NOK 10,000. In 1985, he spent NOK 50,000 on improvements to the property. A few years later, he sells the property for NOK 1,050,000 and incurs NOK 25,000 in expenses for an estate agent, advertising, etc. Ola didn't use the holiday home in five of the past eight years prior to the sale, and the gain is therefore tax liable. 

Purchase price                                     1979	NOK 500,000
+ Purchase expenses	NOK 10,000
= Input value 1979	NOK 510,000

 

Sale price	NOK 1,050,000
– Sales expenses	NOK 25,000
= Sale price	NOK 1,025,000

As the holiday home was purchased before 1991, the input value must be adjusted upwards.

Input value for 1979	NOK 510,000
+ Upward adjustment*)	NOK 408,000
=	NOK 918,000
+ Expenses in 1985	NOK 50,000
+ Upward adjustment of expenses**)	NOK 14,000
= Total input value	NOK 982,000

*) For 1979, the input value must be adjusted upwards by 80 percent. Then the input value is increased by NOK 408,000 (NOK 510,000 x 80 percent).

**) The improvements were carried out in 1985, and the rate for upward adjustment for this year is 28 percent. Then the input value is increased by NOK 14,000 (NOK 50,000 x 28 percent).

Taxable gain:

Sale price	NOK 1,025,000
– Input value	NOK 982,000
= Gain on the sale	NOK 43,000

The gain of NOK 43,000 must be entered in the tax return for the year of sale and will be taxed as general income at the rate of 22 percent, which means that the tax payable on the gain in this example is NOK 9,460.