Most countries in the world charge Real Estate Property Taxes to owners of real estate property located in the country. Often, this type of tax is an annual tax, often based on the value, size, or construction year of the property.
For an investor, looking to acquire real estate in Sweden, it is important to be ware of all necessary compliance and tax obligations deriving from the holding of real estate in Sweden. In this article, we will delve into Swedish Real Estate Property Taxes.
What is the Swedish Real Estate Property Tax?
Sweden has had real estate tax (“Fastighetsskatt”) for a long time. However, in 2008, the real estate privately held homes (houses) were amended. Instead of paying property tax, owners to private held homes are liable to the Swedish Real Estate Property Fee (“Fastighetsavgift”).
Both the Real Estate tax and the Real Estate fee are based on the Tax Assessment Value, which is determined by the Swedish Tax Agency every third year for family houses.
The main rule, according to Swedish Tax Law, is that the individual or corporation that owns a real estate property on 1 January, is liable to pay the tax/fee. However, it is not uncommon for a buyer and seller of real estate to enter into an agreement on which party should pay the property tax.
What are the different classifications of Real Estate Property, for Real Estate tax purposes?
Every real estate property in Sweden is classified for the purpose of the Real Estate Propert Tax. A real estate property can be classified as a ‘small house’ (“Småhus”). For these properties, the Real Estate Property Fee is 0,75 % of the Tax Assessment Value. However, there is a cap at SEK 9 525 applying to the Tax Return of 2025 (for tax year of 2024).
In relation to ‘small houses’ under construction, Real Estate Property Tax is levied, instead of the fee. The applicable rate is 1 % of the Tax Assessment Value. Since 2013, no Real Estate Property Fee is levied on ownership of newly built ‘small houses’ for the first 15 years since the completion of the construction.
For commercially held residential property (apartment buildings), the applicable Real Estate Property Fee rate is 0,3 % of the Tax Assessment Value. However, the rate is capped SEK 1 589 per apartment (applying to Tax Year of 2023). Newly build apartment buildings are exempt from the fee for 15 years, if finished 2012 or later.
Are Swedish Real Estate Property Tax levied on Real Estate Property abroad?
No, this is not the case. Sweden do only apply property taxes on properties that are physically located within the Kingdom of Sweden. However, the Real Estate Property Tax/Fee is levied regardless of if the owner of real estate in Sweden is seen as a Swedish tax resident.
Accordingly, a person that lives abroad, and is non tax resident in Sweden, will still be liable to Swedish Real Estate Property Tax/Fee, should he/she own property here. This requires the filing of an Annual Swedish Tax Return. Forms for this will be sent to the address that was registered with the Swedish Real Estate Governmental Agency, when the property was acquired.
Swedish Taxation of Income from Real Estate Property in Sweden
Income from real estate property in Sweden is subject to a Swedish tax claim, also if the owner is a non tax resident of Sweden. This means that rental income, for example, is liable to Swedish taxes. For individuals holding a private dwelling that is hired out, it is sometimes possible to apply standardized deductions that entails no taxation.
However, if a property is held for business purposes, one must treat the income as business income. This can be quite complicated. Also, there is a risk for doublet taxation, i.e. that both Sweden and another country (the country where the owner live), want to levy taxes on, for example, rental income. Same applies to Capital Gains from selling real estate property. In these cases, the tax treaty between Sweden and the other country should be applied to mitigate the double taxation.
Are you a foreign investor that considers to acquire real estate property in Sweden? Reach out to us for advice on the potential tax consequences.