The deduction for common loans (Danish: 'fælleslån') is a rather unknown deduction, but one many Danes can benefit from especially in the big cities. It concerns the apartment owners who have taken out a common loan through their owners' association. For example, it may be for the renovation of the building's façade, roof or the like.
It is one of the deductions for the fees of banks and loan providers that are not automatically reported, similar to the deduction of guarantee commissions. We'll guide you through it in this article.
In this article, we will cover:
What deductions for common loans are
Other conditions you will need to be aware of
Whether you are eligible to receive any deductions
What is a deduction for common loans?
When you own an apartment, you are typically part of an owners' association, which is the collection of all apartment owners for the entire building. The owners' association handles the common decisions on the building, the courtyard etc.
For large common projects such as renovating the entire façade of the building or the roof of the building, it is very normal to have to take a joint loan for the whole association to cover the costs. This means that the association goes out together and borrows the money to renovate the façade, for example. This is typically cheaper than if each apartment owner had to go out and borrow the money himself.
Once the association has borrowed the money, it is still the owners who ultimately pay off the loan (through the owner's expenses), and therefore they can get deductions. But because the bank doesn't know who all the owners are, you have to report the deduction to SKAT yourself.
The deduction itself is the interest paid on the loan as owner. Typically, an overview will be obtained when taking out the loan, where interest is described. Otherwise, you can contact your property manager for this overview.
What else do you need to be aware of?
There are some other elements to be aware of with this deduction:
You can only get deductions for the interest you pay. I.e. you can't deduct loan repayments or other fees paid in over the owner's expenses
You must have documentation on the loan, e.g. from the statement of your interest/payments when taking up the loan, which you can obtain from the property manager
Check to see if you are eligible for any deductions
Deductions for common loans are for many a hidden bonus that they are not aware that they can get.
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.