Sweden: Taxes and Costs

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High rental income taxes and CGT

High rental income tax and CGT

In Sweden taxable income is classified according to source. Each category is taxed differently. The classifications are: Income from employment; Income from capital and investment; and profits from business.

Rental income from private property and taxed or cooperative flat is considered income from capital and taxed at a flat rate of 30% for resident and non resident individuals.

Deductions

Costs incurred in the lease of the property are not deductible. Instead, a general deduction of SEK4,000 (€435) per property is allowed, plus an additional deduction of 20% of the annual rental income.

Corporate Route

Rental income of business entities are considered business income and subject to municipal tax of 25%, plus national tax. Certain expenses related to business operations such as depreciation, repairs, maintenance, renovations, interest payments, as well as real estate payments are deductible in the aggregate business income.

The applicable national 2006 tax rates are:

Business income is defined as income derived from an independent, commercial and profit-making activity. If these three conditions are not met, then income earned is considered as either employment income, or income from capital. But in fact, income from employment is taxed at the same rate as business income.

Real Estate Tax

Private homes are taxed at 1% of the taxable value while apartments and flats are taxed at 0.5%. The taxable value corresponds to 75 percent of the property’s market value.

If the property is less than ten years old, real estate tax will be lower. Newly built and renovated homes are exempt from property tax up to the fifth year. Subsequent years up to the tenth year are based on 50% of the property’s market value.

Net Wealth Tax

Levied at the rate of 1.5% of the net wealth of a household, with a tax threshold of SEK1.5 million (€163,049) for single persons and SEK3 million (€326,098) for married couples filing jointly. Wealth tax would be reduced if the combined wealth and income tax dues exceeds 60 percent of the taxable income. (Note: Married couples are required to file jointly on their wealth tax only. For other taxes, they are to file separately.)

Capital Gains Tax

As mentioned above, capital gains or losses made by individuals or business entities on their properties are considered as income from capital and will be taxed accordingly. The gain is computed by deducting the acquisition price, selling costs and costs of improvement within the last five years from the selling price, after which two-thirds of the gain will be subject to the 30% tax rate. If loss is incurred, a taxpayer may deduct half of the loss fom the tax return.

Sweden - more data and information

• Guide to buying houses and registering property sales in Sweden

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