Understand Deductions

Deductions when purchasing or selling a home

deduction, purchase sale home

Deductions when purchasing or selling a home

If you are one of the many hundreds of thousands of Danes who have bought or sold a home in the last few years, then there are several deductions to be aware of. There are a lot of fees and expenses that you pay in relation to the transaction which are not automatically reported to SKAT.

These are some of the deductions for the fees from banks and loan providers that are not automatically reported, similar to the deduction for 2-year loans. We'll guide you through it in this article.

In this article, we will cover:
  • What are the applicable deductions when buying and selling a home?
  • Other conditions you will need to be aware of
  • Whether you are eligible to receive any deductions

Deductions when purchasing or selling a home

When you buy or sell a home, there are several kinds of fees and costs for which you can get deductions. Many of them you even have to report to SKAT yourself to get the deduction. Those are the ones we'll go through here.

  1. Difference-interest (Danish: 'difference-renter'): When you sell a home, you typically need to refinance or repay your mortgage. In this context, you may have to pay so-called 'difference-interest'. It is a kind of compensation to the mortgage institution because you repay the loan early and they thus continue to pay interest to the bondholders for a period of time.
  2. Mortgage guarantee (Danish: 'pantebrevsgaranti'): When you need to buy a home and take out a mortgage, you can choose to buy a so-called 'mortgage guarantee'. Mortgage guarantee is a kind of insurance you can take out to guard yourself against the case where you cannot repay the loan in a timely manner.
  3. Mortgage insurance (Danish: 'boliglånsforsikring'): When you need to buy a home and take out a mortgage, you can choose to buy a so-called 'mortgage insurance'. It protects you and your family, in the case that one of you pass away or becomes incapacitated. It that case, it covers the outstanding debt of the concerned person.
  4. Guarantee commission (Danish: 'garantiprovision'): Guarantee commission is a form of fee that a bank takes, for example, in connection with a mortgage refinancing. This is due to the fact that while the new loan is being reported to the state, the bank is providing a guarantee for the loan. You can read much more about this deduction (including an example) in our article here.
  5. Interest on the reimbursement statement (Danish: 'renter på refusionsopgørelsen'): When you take over a home, a statement is made of the expenses incurred by the seller that relates to the buyer and vice versa. In some cases, the buyer may take over the seller's loan and must thus add the interest paid by the seller on the reimbursement statement. You can read much more about this deduction in our article here.

All of the above expenses and fees will appear on the fee statements sent to you by the bank, mortgage institution or reimbursement statement made as part of the the property transaction.

The deduction itself is the fees paid. However, there are some elements to be aware of that we go through below.

What else do you need to be aware of?

There are some other elements to be aware of with this deduction:
  • You must have documentation on the loan and fees, for example, a loan document
  • In order to obtain a deduction for guarantee commission, you must not have made a so-called 'fixed-rate agreement' (Danish: 'fastkursaftale')

Check to see if you are eligible for any deductions

Deductions applicable when buying and selling your home are a hidden bonus that people don't pay attention to.

That's why we in Tax Helper have created an easy and intuitive platform where you can easily see if you can get the deduction and get all the way across the finish line of reporting your deduction to SKAT. It is free to try out, and you only pay if you get a tax refund.