The upcoming changes to Danish property tax rules means that from next year, property tax will be based on new appraisals of land and real estate values..
The basis for property taxation in Denmark relies on public real estate appraisals. Recent appraisals have generally shown higher property valuations than those from 2011 and 2012, mainly due to rising housing prices in the past few years. As a result, new rates will be applied once the new valuations come into effect.
According to the Danish tax authorities, most homeowners will see lower taxes as a result of the new rules. However, to shield all homeowners from higher property taxes due to increased valuations a subsidy will be applied to properties which see their calculated rates go up.
Existing homeowners will thus not experience higher property taxes in 2024 compared to what they would have paid under the current rules.
However, this tax subsidy doesn’t apply to new homeowners from January 1st, 2024, putting pressure on first-time buyers – and prompting a surge in housing sales in the run-up to the new tax framework.
The allure of a “tax discount”
The upcoming changes have already had visible repercussions in Denmark’s housing market.
According to an analysis by Finans and Nykredit, apartment prices in major cities would need to decrease by around 5-10 percent after the New Year for new buyers to maintain their total costs (mortgage plus tax) at a level similar to the existing rules.
Furthermore, apartments are more likely to see tax increases under the new rules due to the valuation appraisal system, which had previously subjected them to lower property taxes compared to houses.
Some prospective buyers, especially those looking for apartments in major