Tax on property income in Norway
November 01, 2017
Effective Tax Rate on Rental Income
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Global Property Guide
Nonresidents are taxed on their income from Norwegian sources, particularly income from real estate property, income from participating in or conducting a business carried out or managed in Norway, and income in any form received as a director or member of a board of directors or the like of a Norwegian company or entity. Married couples are generally taxed jointly,
Nonresidents in Norway are considered class 0 taxpayers and taxed at a rate of 24%. Expenses incurred in the generation of income are deductible.
Rental income earned by a nonresident is taxed at the general rate, which is at 24%. Expenses incurred in acquiring rental income are deductible.
Gains from the sale of real estate property are taxed as ordinary income at 25%.Taxable capital gains are computed as the difference between the selling price and acquisition costs, less related expenses.
Holiday houses are also exempt from capital gains tax if the taxpayer has owned them for more than 5 years and has used the property for at least 5 years in the 8-year period prior to selling the property.
Income and capital gains earned by companies in Norway is taxed at a flat rate of 25%. Expenses incurred in generating income are deductible. Taxable capital gains are generally computed as selling price less acquisition cost and depreciation.
A wealth tax is imposed on real estate property, at the national and municipal level. The tax is levied on the estimated market value of the property. The national net wealth tax is a flat rate of 0.85%.
The tax is levied only on net wealth exceeding a certain threshold. For year 2017, the threshold is NOK1,480,000 (€148,000). For year 2016, the threshold is NOK1,400,000 (€140,000). For year 2015, the threshold is NOK1,200,000 (€120,000). For year 2014, the threshold is NOK1 million (€100,000).
Municipalities in Norway are entitled to impose a tax on real estate property located in their jurisdiction. The tax is levied at the assessed value of the property, which is about 20% to 50% of the property’s market value. Property tax rates range from 0.2% to 0.7%, depending on the municipality.
The real estate tax is deductible for income tax purposes if the property is used for business.