Tax on rental income in Norway: when is it tax-free, and when do you pay?

Few things create more uncertainty among landlords in Norway than tax. Which is a shame, because the main rules are actually manageable — there are three distinct situations, each with its own treatment. Find yours, and the rest falls into place.

(Rates and thresholds in this article are the general rules as of the publication date — always check skatteetaten.no for current figures before filing.)

1. You rent out part of the home you live in

This is the big tax advantage in Norwegian letting: if you rent out part of your own home — a bedsit, a basement flat, a room — the rental income is tax-free, provided you yourself use at least half of the property, measured by rental value.

Note that it is the rental value that counts, not the square metres. A large, plain basement can have a lower rental value than a smaller, well-finished main floor. If the part you let out has a higher rental value than the part you live in, the entire rental income becomes taxable — not just the excess.

The exemption also assumes ordinary long-term letting. And as always: no deductions for costs when the income is tax-free.

2. You short-let your own home

If you let out all or part of your home for periods of less than 30 days — typically through Airbnb or similar — separate rules apply:

• The first NOK 15,000 each year is tax-free
• Of the amount above that threshold, 85 per cent counts as taxable income

A worked example: earn NOK 40,000 from short-letting during the year, and NOK 15,000 is exempt. Of the remaining NOK 25,000, 85 per cent — NOK 21,250 — is taxable, and is taxed as capital income.

3. You rent out a second property

If you own a property you do not live in and let it out, all rental income is taxable as capital income. The rate on ordinary income has stood at 22 per cent for several years — check the current figure.

But — and a surprising number of landlords forget this — you are taxed on the profit, not the turnover. Costs of letting are deductible:

• municipal charges and property tax
• shared costs in a housing company or condominium
• insurance
• maintenance — repairs that keep the property in the same condition
• furniture and equipment for furnished lets (smaller purchases can normally be deducted in full)
• advertising, travel for viewings and follow-up, accounting help

The important line runs between maintenance and improvement. Replacing a broken water heater or repainting is maintenance — deductible now. Adding a room or materially raising the standard is an improvement — no ongoing deduction, but it is added to the cost base and matters when you eventually sell.

If the letting runs at a loss in a given year, that loss is normally deductible against other income.

Documentation is half the job

Deductions are only worth something if you can document them. In practice that means:

1. Keep every receipt — including the small ones. Ten purchases of NOK 800 is NOK 8,000 in deductions.
2. Separate maintenance from improvement as you record the cost, not in March when the return is due.
3. Track income and costs per property. If you own several, you will want to show the figures separately.

Rental income from a second property is reported in the tax return on a dedicated form for letting real estate. The figures you need are precisely the ones you have — or have not — recorded through the year.

In short

Situation	Tax
Long-term letting of part of your own home (you use at least half, by rental value)	Tax-free
Short-letting your own home (under 30 days)	First NOK 15,000 free, then 85 % of the excess taxable
Second property	Profit taxable as capital income, costs deductible

Rentoutbase records rental income and costs per property through the year — so the figures for your tax return are already in place.

Written by Embrik Skrindo