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🇸🇪 Sweden /Economy & Trade

Warning: Fee-free months could lead to a tax shock

From Svenska Dagbladet · () Swedish

Translated from Swedish, summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • Sales of newly built homes in Sweden are increasing but remain slow compared to older properties, with developers offering incentives like "fee-free months."
  • These incentives, such as 24 months without fees offered by Ikano Bostad, can lead to a future tax burden, as the Swedish Tax Agency considers them a price reduction.
  • The Swedish Tax Agency states that such discounts reduce the acquisition cost, and this stance, established in 2014, remains current.

The market for newly built homes in Sweden is showing signs of recovery, with sales increasing in the first half of the year compared to the previous period. However, the pace remains sluggish when pitted against the sales of older properties. Developers are employing various strategies to attract buyers, including offering extended periods of "fee-free months."

New homes are relatively expensive compared to those competing with the older stock because new production costs have risen so much.

— Robert Boije, Chief Economist at SBABExplaining the challenges in the new housing market.

For instance, in the Vega district south of Stockholm, Ikano Bostad is offering an attractive deal of 24 months without any fees for newly built housing cooperatives. Similar campaigns are also being run by companies like Stena Fastigheter and JM. While these offers sound appealing to potential buyers, they come with a significant caveat that could lead to a future tax liability.

According to the Swedish Tax Agency (Skatteverket), these "fee-free months" are effectively treated as a price reduction on the property. Consequently, when the property is eventually sold, the capital gains tax (reavinstskatt) will be calculated on a reduced acquisition cost. This means that approximately 22 percent of the value of the waived fees could be lost to taxes, turning a perceived benefit into a future financial burden.

The person offered free or discounted monthly fees in connection with the acquisition of a new housing cooperative must reduce their acquisition cost by the actual discount received.

— Swedish Tax AgencyStating the tax implications of fee-free months on new properties.

The Tax Agency's position on this matter is clear and has been consistent since a 2014 statement, which remains in effect. They stipulate that any buyer receiving free or discounted monthly fees in connection with the purchase of a new housing cooperative must reduce their acquisition cost by the actual discount received. For the new housing market to truly gain momentum, experts suggest that prices in the older housing stock need to rise, or construction costs for new builds must decrease, though the latter is considered less realistic.

It has been difficult for me to see.

— Robert Boije, Chief Economist at SBABResponding to the possibility of construction costs decreasing.
DistantNews Editorial

Originally published by Svenska Dagbladet in Swedish. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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