Have you, or someone you know, recently sold a home? Have you perhaps gotten old enough so that it's time to change in size or have you recently gotten a job abroad? Maybe you have simply found your dream tenancy and thus chosen to sell your condominium? This blog post is written for you. According to the Government's budget bill for 2021, the so-called deferral interest rate for deferred tax on profits from the sale of housing was abolished. According to the Ministry of Finance, the change is estimated to reduce tax revenues by SEK 1.72 billion annually.
The government’s agreement made it possible
The government proposal that has been passed is based on an agreement between the government, the Center Party and the Liberals. It aims to promote the use of the existing housing stock by reducing the lock-in effects and thus increasing mobility in the housing market, so that people can move to where their jobs are. In practical terms, the rule change means that from the income year 2021, it will not cost anything to postpone profit taxation. Even you who sold your home during the years 2015-2020 without requesting a deferral can benefit from this rule change by doing so afterwards. In this way, you get back the tax you have already paid.
The Swedish Tax Agency’s e-service will help you
The abolished interest rate only applies to permanent housing. For those of you who have already sold and paid profit tax for one, there has been an e-service with the Swedish Tax Agency since December 2020, where you can subsequently apply for a deferral by requesting a reconsideration. It is possible to request a reconsideration six years back in time. In the e-service, most things are already pre-filled. After some completion of the information, you can see what a deferral means financially, after which you can decide if it is something that may be relevant to you.
That’s how it works
According to the Income Tax Act, those who have sold their permanent home and have a deferral amount must include a special standard income in the income category capital of 1.67% of the size of the deferral amount. The tax burden of this standard income is what in practice is the interest for the deferral. This interest rate is currently around 0.5% and is what will be abolished in the future. Should you want to get back tax already paid, you must therefore pay this interest retroactively for the years that have passed since the tax was paid.
Interest-free loan from the state
You thus receive an interest-free loan from the state in return for you paying deferred interest for the years that have passed since the sale. Of course, you also have to live with a deferred tax debt to pay at some point in the future. You must therefore decide for yourself, with the e-service as an aid tool, whether this change can benefit you. In general, loans for consumption are of course advised against, but since the Riksbank’s inflation target is set at around 2%, the interest-free loan means a large so-called net profit in real terms. Thus, this can be a good way to free up capital if, for example, you want to buy a summer house or mountain cottage, help the children with a home purchase or build a relatively stable portfolio that will return money over a longer period of time. For example, if you sold the villa to buy a smaller (cheaper) apartment, you can claim back the tax paid on the difference to repay the loan for the apartment. In this way, you repay your mortgage, which costs money, with an interest-free loan from the state. Please note, however, that you must pay the retroactive interest if you have already sold your home in the last six years. In such a case, you must weigh the reduction of the bank loan and its cost, against the retroactive interest rate for the years your tax funds have been paid in.
Get inspired, but research more yourself and get help
This blog is a summary and should be seen as a summary and introduction to the current tax situation and opportunities. This should not be seen as an instruction or conclusion to how and what you can or should do, but rather inspiration for which areas it may be worth taking a closer look at when planning your personal finances and finding out what opportunities there are.
We do not talk about how to plan your personal finances, but provide investment opportunities many discover and are happy with. We always advise you to contact a professional advisor when planning your finances, if you are at least unsure. In addition, the Swedish Tax Agency’s tax information is available all year round, free of charge.