Valuation discount in connection with assessment of wealth

You’ll be granted a reduction of the taxable value of some assets, a so-called valuation discount. For some assets, you’ll also be granted a reduction in the deduction for debt, a so-called debt reduction.

The valuation discount increases from 35 to 45 percent for 2021 for:

  • shares, the share component of units in securities funds, the share component of investment fund accounts, equity certificates, shares in businesses assessed as partnerships
  • fixed assets, including commercial property

The valuation discount only includes assets owned directly by the taxpayer.

What is a validation discount?

A valuation discount is a discount granted for the value of certain assets, such as residential and commercial property, shares, etc. and fixed assets. The valuation discount reduces the basis for net wealth tax and may result in lower net wealth tax if you have net wealth that exceeds the minimum amounts, see the rates concerning net wealth tax.

If you have debt, the deduction for debt will be reduced proportionately between the value of some assets with a valuation discount and the value of your total wealth. If you have a spouse, registered partner or a spouse-equivalent cohabitant, the debt deduction will be reduced taking into account the total assets and debt of both of you.

Peder Ås has NOK 1,800,000 in debt as at 1 January 2022. His wealth before the valuation discount is NOK 6,000,000.

He owns the following assets:

  • Primary dwelling with 75 percent valuation discount
  • Units of equity funds with 45 percent valuation discount as at 1 January 2022.
  • Bank deposits (other wealth) that do not give you the right to a valuation discount.

In this case, the debt for which he receives a deduction is reduced by NOK 30,000. The amount has been calculated by distributing the debt of NOK 1,800,000 between the assets. The equity fund units’ portion of the debt amounts to NOK 300,000. This portion is reduced by 25 percent due to the valuation discount.

 

Primary dwelling valued at 25  %

Units in equity fund valued at 
55 %

Other wealth  valued at full value

Total

Value before valuation discount

4,800,000

1,000,000

200,000

6,000,000

Share of sum wealth

80 %

16.67 %

3.33 %

100 %

Taxable value

1,200,000 (25 %)

550,000 (55 %)

200,000 (100%)

1,950,000

Share of debt before adjustment for valuation discount

1,440,000

(1,800,000 x 80 %)

300,000

(1,800,000 x 16.67 %)

60,000

(1,800,000 x 3.33 %)

1,800,000

Deductible debt

1,440,000 (no reduction)

165,000

(300,000 x 55 %)

60,000

1,665,000

Taxable net wealth

- 240,000

385,000

140,000

285,000

 

Completing the tax return

Normally you’ll receive a pre-filled tax return. Taxable wealth of real property will be entered after deduction of valuation discount.

Wealth from shares, equity certificates, share components of share savings accounts and share component of units in securities funds will be pre-filled before valuation discount. You must not adjust these amounts downwards, because the valuation discount will be deducted on your tax assessment notice.

You must not reduce the pre-filled debt in the tax return. The reduction is registered automatically in your tax assessment notice. If you have debt that is not pre-filled in the tax return, you must enter the total amount.

In the table below, you can see the type of assets and the size of the valuation discount.

Note! The valuation discount provided in the table does not take into consideration whether the taxable value is reduced because you have documented a lower market value.

Assets

Explanation

Valuation discount in 2020

Valuation discount in 2021

Valuation discount in 2022

Primary dwelling on the Norway mainland

Primary dwelling is the residential property where the owner has his or her registered address at the end of the year.

75 percent

75 percent

75 percent, but limited to 50% for the part of the calculated or documented sales value that exceeds NOK 10,000,000

Secondary dwelling on the Norway mainland

This is other property or housing unit that cannot be characterised as a primary dwelling or holiday home. Generally, the land register (the state's official register of real property) will show if the property is considered a residential property or a holiday home.

Wealth in the form of residential property on Svalbard or abroad is assessed based on the rules concerning holiday homes in Norway.

A multi-unit building is generally to be considered a secondary dwelling, but if you live in one of the housing units at the end of the year, you may have the right to a valuation discount as a primary dwelling for the unit where you live.

10 percent

10 percent

5 percent

Commercial property on the Norway mainland and rented-out commercial property on Svalbard or abroad

Commercial property is considered to be

  • office premises
  • store
  • storage facility
  • production facilities / factory
  • parking facilities
  • workshop
  • undeveloped land that you rent out as part of your business activity
  • holiday homes that you rent out as part of your business activity

However, in this context, residential properties, power generation facilities, agricultural properties and forestry properties are not considered commercial properties.

35 percent

45 percent

25 percent

Not rented out commercial property on Svalbard or abroad

 

35 percent

45 percent

25 percent

Agricultural and forestry property

 

35 percent

45 percent

25 percent

Power generation facilities

 

35 percent

45 percent

25 percent

Other real property in income-generating activity

This applies to accounts-based assessment of

  • residential property or occupancy right on Svalbard or abroad
  • undeveloped land
  • a holiday home, but not if you rent it out as part of your business activity

The property is subject to accounts-based assessment if you assess your income based on actual taxable income with deductions for actual deductible costs for the property.

35 percent

45 percent

25 percent

Unit in a business assessed as a partnership

This is positive net wealth from a business assessed as a partnership or a Norwegian-controlled foreign company (NOKUS) that you must register as wealth because you’re a partner in the company or married to a partner in the company.

35 percent

45 percent

25 percent

Shares etc.

This includes:

  • shares
  • equity certificates with savings banks
  • the share component of share savings account
  • the share component of an investment funds account

However, you’re not entitled to a valuation discount for a convertible bond or the subscription rights to shares.

35 percent

45 percent

25 percent

Share component of units in securities funds

If you own units in hybrid funds, you get a valuation discount for the proportionate portion of the funds’ assets invested in shares.

35 percent

45 percent

25 percent

Other fixed assets in income-generating activity

The valuation discount is deducted from the value that you enter for the following assets in the tax return:

  • fixed assets used in business activity
  • ships and vessels
  • capitalised ground rent
  • rights linked to forest
  • other wealth related to income-generating activity

However, you’re not entitled to a valuation discount for inventory or receivables.

35 percent

45 percent

 

 

25 percent

The summary below applies if you submit your tax return in the new version.

Topic

Card

Header 2021

Remarks

Bank, loans and insurance

Investment funds account

Wealth, share component 

Value before valuation discount

Housing and property

Housing and property

Taxable value of primary dwelling

Value after valuation discount

Taxable value of secondary dwelling

Value after valuation discount

Taxable value of multi-unit building

Value after valuation discount

Taxable value of other real property related to income-generating activity

Value after valuation discount

Taxable value of property subject to accounts-based assessment

Value after valuation discount

Taxable value of holiday property subject to accounts-based assessment

Value after valuation discount

Taxable value of farms

Value after valuation discount

Taxable value of commercial property

Value after valuation discount

Taxable value of forest property abroad

Value after valuation discount

Leasehold plots for residential and holiday property

Value before valuation discount on capitalised ground rent

Value before valuation discount

Used hunting rights and the renting out of rights linked to forestry

Rights linked to forestry

Value before valuation discount

Forest property

Forest property

Value after valuation discount

Finance

Shares

Wealth

Value before valuation discount

Share savings account

Wealth, share component 

Value before valuation discount

Securities fund

Wealth, share component 

Value before valuation discount

Wealth and income in a business assessed as a partnership

Wealth and income in a business assessed as a partnership

Net wealth

Value before valuation discount

 

Business activity

Total debt and wealth from business activity

Fixed assets from business activity

Value before valuation discount

Ships, fishing and whaling/sealing vessels

Ships and vessels

Value before valuation discount

Other circumstances

Other wealth related to income-generating activity

Amount

Value before valuation discount