Tax on Rental Income - How Much Do You Need to Pay?
When you rent out your property in Sweden, understanding how your rental income is taxed is crucial. This guide explains the tax rules clearly and helps you calculate the amount of tax you'll owe on your rental income.
What Counts as Taxable Rental Income?
Rental income refers to the money you receive from your tenants. In Sweden, rental income is generally taxable, but certain expenses can be deducted before calculating the final tax amount.
Calculating Tax on Rental Income in Sweden
In Sweden, there are primarily two ways to calculate taxes on rental income: the standard deduction method and the actual expense deduction method.
Standard Deduction Method
You are entitled to a standard deduction of SEK 40,000 annually per property. Rental income exceeding this amount is taxable. This deduction applies regardless of how many days per year you rent out your property.
Actual Expenses Deduction Method
You can deduct actual costs directly related to renting out your property, such as electricity, water, heating, insurance, maintenance, and mortgage interest. The tax is then calculated on the remaining profit after these deductions.
Which Expenses Can Be Deducted?
Typical deductible expenses include:
- Maintenance and repairs
- Insurance premiums
- Utilities such as electricity, water, and heating
- Mortgage interest payments
How to Report Rental Income on Your Tax Return
Rental income should be declared in your annual income tax return. Enter the amount in the section dedicated to private property rentals.
Frequently Asked Questions about Rental Income Taxes
When Do I Pay Taxes on Rental Income?
You pay taxes on rental income once a year when filing your annual income tax return.
Can I Change the Deduction Method?
No, in Sweden, the standard deduction is the default method. However, you can always deduct actual expenses in addition to the standard deduction, so there's no need to officially change methods.
What About Renting Through Airbnb?
Airbnb rentals follow the same rules as other private rentals. You're entitled to the same standard deduction of SEK 40,000 per year.