Low Tax on Cottage Rental

This article was previously published on Finansavisen.

Private financing:When renting your own holiday home, the first NOK 10,000 of rental income is tax-free.

Of the income above NOK 10,000, 85 percent of the rental income is taxed as capital income, i.e. with a tax rate of 22 percent.

With a rental price of NOK 30,000 per week for six weeks, that’s NOK 180,000, that would mean a tax bill of NOK 31,790, that’s 17.7 percent tax.

If you can have a rental income of NOK 50,000 per week, and rent for the same length of time, your tax bill will be NOK 54,230, and your net rental income of NOK 245,770, before electricity and maintenance costs.

More things

If you own several cabins, for example one in the mountains and one by the sea, the first NOK 10,000 in rental income per year is tax deductible for each.

The fact that the first NOK 10,000 in rental income is tax-free also applies to other things, such as a boat.

It can make it more profitable for those who have a vacation home with a boat to rent the two out on two different leases, even if it’s to the same person. The total tax is then less than if the boat was included in the cabin rental, even if the rate for the charterer was the same.

This rule applies if the rental purpose is a cabin that you reasonably use yourself, and is not considered a purely rental cabin. On the other hand, a cabin that you don’t use yourself must be calculated so that the actual rental income is taxable with operating and maintenance expenses deducted.

house rent?

Some also choose to rent out their home year-round for the holidays, as some Arendalites do during Arendal week, at a solid profit.

In such a case, the income would be taxable in the same way as a vacation home rental, according to the form’s method, as long as the rental term is shorter than 30 days.

If the entire house is rented out to a single tenant for more than 30 days, it will be considered a long-term rental, and then the entire rental income will be taxable if it exceeds NOK 20,000.