Sale of family property
When the time comes to sell your parental property purchase apartment, it is particularly advisable to seek professional guidance.
The profit from the sale can be subject to taxation in various ways, potentially avoided, or significantly reduced depending on the circumstances.
If you are considering selling your parental property purchase, a number of considerations may be relevant.
In the case of a sale on the open market, any gain will generally be taxable if you have not personally occupied the property. The applicable tax rate ranges between 33% and 43%, and the calculation is governed by the Danish Property Gains Taxation Act (Ejendomsavancebeskatningsloven). If a gain is realized, it is taxed immediately. Conversely, if a loss is incurred – e.g., due to a family transfer at a favorable price – the loss must be registered. Upon registration, the loss can be carried forward and, under certain conditions, offset against future taxable property gains (this does not constitute individual advice – please contact us for guidance on your specific situation).
A gain may also be subject to a provisional tax of 22% if you choose to continue operating under the business taxation scheme. This can be advantageous if you intend to use the proceeds for other activities within the business. However, if you cease leasing activities and operating a business, it may be more beneficial to have the gain taxed as capital income.
For many, avoiding taxation on a positive property gain by transferring the property to their child may be attractive. If the child subsequently resides in the property, a tax-exempt gain may be achievable under certain circumstances. We are happy to provide more specific guidance on this matter.
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