Item 3.3.6

3.3.6 Deductible losses on the sale of real property

Applies to the income year 2017

Under this item, you must enter your calculated deductible losses on the sale of real property, such as housing and plots of land. The general rule is that you will be entitled to a deduction for your losses if any profit you had made would have been taxable. The period of ownership and period of occupancy determine whether or not it will be taxable. Any gain must be entered under item 2.8.4.

Does this item concern me?

Plots of land

If you sell a plot at a loss, you must enter the deduction for this under this item. Losses on the sale of plots are always deductible.

Housing

If you have sold a house/apartment at a loss, you may be entitled to a deduction if you have:

  • used it as your own home for less than 12 out of the last 24 months (period of occupancy)and/or
  • owned the house/apartment for less than one year (period of ownership) before the sale or an agreement concerning the sale of the property was established. The period of ownership is determined from the date on which you took over the property through until an agreement concerning the sale (realisation) of the property is esablished. 

If there is a hindrance to use (e.g. you are prevented from fulfilling the period of residence requirement due to work or illness), you can still be credited with non-residential time in relation to the tax rules concerning the sale of residential property. For more information on the sale of residential property, see here

Holiday homes

If you have sold a holiday home at a loss, you may be entitled to a deduction if you have:

  • used it as your own holiday home for fewer than five out of the last eight months (period of occupancy) before the sale and/or
  • owned the holiday home for less than five years (period of ownership) before the sale. The period of ownership is determined from the date on which you took over the property. You will normally be considered to be the owner from the date on which you actually took possession of the holiday home.

Taxpayers who own commuter accommodation in addition to their own residential property can fulfil the period of residence at both homes simultaneously. If you have sold a dwelling which you have not used as commuter accommodation in 12 of the last 24 months and/or owned it for less than one year, any loss that you incur upon selling the property may be entered as a deduction. 

If a joint home is realised in connection with the break-up of a relationship between spouses or spouse-equivalent partners with joint children, the person who moves out will be credited with the occupancy period in the same way as the person who remains in the home.

If a house that is sold at a loss is owned by several owners, the loss must be assessed for each individual owner and allocated in proportion to their respective holding.

If the property has a larger area than is considered to constitute a naturally associated plot, the sale of the property may be considered as the sale of housing/holiday home and plots. Losses on the sale of plots are always deductible.

If the sale concerns a number of free-standing buildings, consideration must be given to whether each building has sufficient affiliation to the dwelling in order to be considered part of the dwelling.

If you have used part of the dwelling as your own home and the rest as a taxable rental dwelling, each part must be considered separately. You can enter losses on the sale of the rental part as a deduction. You can enter losses on the sale of the part that has been used as your own home as a deduction if you have not used it as a dwelling for 12 of the past 24 months and/or owned it for less than one year before the property was sold.

How do I enter this in my tax return?

You must fill in the municipality to which the property belongs, the holding number, subholding number and the calculated loss amount. You must also attach a list of the calculated loss. To help you calculate the gain/loss, you can use form RF-1318 Skjema for salg av bolig, fritidsbolig eller tomt (Sale of housing, holiday home or plot - in Norwegian only). This form should not be attached to the tax return, but it can be sent to the tax office if a more detailed explanation is requested concerning how the gain/loss was calculated.

Remember not to put "–" before the number when you submit electronically. You will receive a 24 percent deduction on the loss.

Calculating losses on the sale of real property

You must calculate the loss by taking:

  output value
- input value
= result

If the result is a positive amount, you should enter it under item 2.8.4, but if it is negative, it should be entered under item 3.3.6 as a deduction.

The input value is the amount you paid for the property when you purchased it. In addition, you can add certain expenses that are attributable to the purchase of the property, such as:

  • estate agent expenses
  • improvements (excluding maintenance)
  • document tax
  • registration fees

So

  what you paid for the dwelling/value upon inheritance
+ expenses in connection with the purchase/takeover
= input value

 

If you built the property yourself, the cost price will form the basis for the input value. This covers both the expenses attributable to construction of the property and the costs of purchasing and preparing the plot for construction. The value of your own work linked to newbuilds or improvements can also be added to the input value. The value of your own work should 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, e.g to the hourly rate for unskilled labour. The rates can be found on the Norwegian Labour Inspection Authority’s website. (Note that the value of your own work must be recognised as income in the year in which the work is performed. Exceptions apply of course to work that you do on your own home or holiday home in your spare time).

If you inherited the property after 2014, the basis for the input value will be either the testator’s input value (in the case of continuity) or the estimated market value at the time you inherited the property (in the case of discontinuity). The market value at the time of inheritance will form the basis for the input value if the testator met the residential and ownership period requirements at the time of inheritance, and the property is a residential property or a holiday property. Find out more about discontinuity and continuity here.

The output value is the amount you sell the property for. The output value is reduced by costs linked to the sale, e.g. estate agent's commission, advertising costs, etc.

Documentation requirements

You do not need to send us any documentation of your loss calculation, but you must be able to present documentation and/or the loss calculation if we ask you to. This also applies to the documentation of purchases, expenses, improvements and expenses.

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