The deduction for private loans is a fairly unknown deduction. This applies, for example, if you have borrowed money from family, friends or other private individuals. If on these loans you pay an interest rate, then there are deductions to be made.
Because these loans are not made through a bank or the like, no one automatically reports the interest. Therefore, you must report them to SKAT yourself. We'll guide you through it in this article.
In this article, we will cover:
What deductions for private loans are
Other conditions you will need to be aware of
Whether you are eligible to receive any deductions
What are deductions for private loans?
When you make a loan between private individuals, for example, a loan from your parents, you pay the loan back over a number of years and typically with interest on top of that. You can get deductions for that interest. Since neither party is a business, no one reports the deductions to SKAT. Therefore, you must report them yourself.
There are two kinds of interest you can get deductions for. The first is interest on loans from family or friends as mentioned above. The second is interest that you pay on a reimbursement statement (Danish: 'refusionsopgørelse') when buying/selling a house or apartment. When you take over a house or apartment, a statemet is made of the expenses incurred by the seller, but relating to the buyer and vice versa. In some cases, the buyer may take over the seller's loan and must thus enter the interest paid by the seller on the reimbursement statement . The interest is actually related to the buyer, who also pays them in the end, so the buyer can get deductions for them.
The deduction itself is the actual interest paid either on the loan or on the reimbursement statement. But there are a few essential elements to be aware of.
What else do you need to be aware of?
There are several other elements to be aware of with this deduction:
The loan must be personal to you. For example, you are not be able to claim deductions for paying interest on loans your children have with others
You must have information on the person you pay interest to, for example Social Security number (CPR) or name and address
You must have documentation on the loan e.g. a loan document
Check to see if you are eligible for any deductions
Deductions for private loans are a hidden bonus that people don't pay attention to 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.