When you rent out a property or a room in a property, you receive rental income from your tenant every month for as long as the rental period lasts. This rental income is part of your taxable income, and you must therefore pay tax on the total amount.
Even though you have to pay tax on your rental income, there can be significant savings if you are familiar with the tax rules for property rentals, such as the ability to deduct expenses for maintenance and repairs. Unfortunately, these tax rules can be quite complex and difficult to understand.
Private or commercial property rental?
To perform the correct tax calculation, you must first determine which type of rental activity you are conducting.
We can broadly distinguish between two types of rentals: private or commercial. You may also have encountered the terms short-term rental and long-term rental.
Regardless of how you rent out your property, there are different ways to handle the taxation of your rental income.
Commercial rental
This type of rental (also known as long-term rental) refers to renting out a house or apartment that you do not live in yourself, for a period of 12 months or more at a time.
This could, for example, be newly acquired properties purchased for the purpose of renting out, or a house that you have had on the market for a long period but have now moved out of and are renting out instead.
If you have commercial rental income, you can easily and quickly manage both your preliminary income assessment and tax return using Reportability's tool.
Private rental
Private rental (or short-term rental) refers to renting out a property that you generally do not live in yourself.
For private property rentals, this applies if you are renting out a room in your home for between 1 and 12 months per year, or if you are renting out your entire home for a period of less than 12 months per year.
If, for example, you rent out your home during a 4-month stay abroad, or on weekends and holidays via platforms like Airbnb, it is considered a private rental. For short-term rentals, you can report tax on your rental income in two ways: via the standard deduction or via the accounting-based deduction.
Reportability's tool is not suitable for this type of tax calculation, but you can read more about the rules for short-term rentals further down in this post.
How do you calculate and report tax on rental income?
As a landlord, you likely want to know how much tax you need to pay on your rental income. This naturally depends on how much you earn from your rental, but also on which tax scheme you choose to use.
When you engage in long-term or commercial rental, the tax authorities shift from viewing you as a private individual to viewing you as a small business—though you do not need a CVR number.
In practice, this transition means you will receive an expanded tax return form on skat.dk, where you must provide information about your rental income and any expenses for maintenance, electricity, water, heating, and other costs. You will also need to select the tax scheme that best suits your financial situation.
Which tax scheme should you choose?
For commercial rental, you can choose to calculate your tax using the rules in the Personal Tax Act, the Capital Return Scheme, or the Business Tax Scheme:
Personal Tax Act
Under the Personal Tax Act, you pay tax on your profit as if it were regular salary from your job. This makes it the simplest method for calculating tax on rental income.
Capital Return Scheme
The Capital Return Scheme provides access to a capital return and is therefore more tax-advantageous than the Personal Tax Act. This is because you pay less tax on a portion of the profit, as capital income is taxed at a lower rate than personal income. Currently, the capital return is not very significant because the return follows the market interest rate. The market interest rate is 2% (2025), but this is subject to change.
Business Tax Scheme
The Business Tax Scheme is the tax scheme that offers the most tax benefits. In this scheme, you get, for example, a full deduction for your interest expenses and the option to save your profit at a low tax rate of 22%.
If you want to learn more about tax schemes, you can take a look at our blog post about tax schemes. You are also always welcome to contact us in the chat.
What can you deduct from your taxes when renting out a property?
There are a wide range of deductions you can utilize as a landlord. To claim these deductions, you must inform the tax authorities about the deductible expenses you have incurred in connection with the operation and maintenance of the rental property.
You do this in the various fields on your preliminary income assessment and tax return. Our tool provides you with a simple overview showing which figures to enter in the fields on skat.dk – ensuring that you pay the correct tax on your rental income.
We have compiled a list of deductible expenses for commercial rental:
1. Property taxes: As a homeowner, you pay two types of property tax: property value tax and land tax. You pay your property tax via your preliminary and annual tax statements.
2. Maintenance: There are several tax-deductible maintenance expenses, including costs for painting, minor repairs, and addressing wear and tear.
3. Electricity, water, and heating: You can deduct expenses for electricity, water, and heating if your tenant pays for them as part of the rent. If the tenant pays separately for one or more of these, you cannot claim them as a tax deduction.
4. Water, sewage, and waste disposal fees: These fees are necessary operating costs when owning a property, and these expenses are therefore tax-deductible.
5. Administration and accounting assistance: You can claim deductions for expenses such as advertising costs and fees for rental platforms like Boligportal or Lejebolig. The same naturally applies to the cost of Reportability.
6. Property insurance
7. Chimney sweeping, snow removal, and street cleaning
8. Homeowners' association fees
Are you a new landlord looking to learn more about taxes before, during, and after renting out your property? You can read more in our guide to property rental.
Here, you will get help with setting the rent, information on how your tax card changes, and insight into ownership structures.
Fast and secure help with tax deductions and tax calculations
Do you find it difficult to navigate the many rules and options for tax deductions? And would you also like to avoid paying too much – or too little – in tax?
At Reportability, we can help you pay the correct tax on your rental income. Our tool enables you to become your own accountant in just 5 simple steps, where you can easily calculate your tax and claim all the deductions you are entitled to.
All it takes is for you to enter your income and expenses related to your property rental. The tool then calculates your tax and secures your deductions.
You will then receive a complete overview showing you exactly which figures to enter in the boxes on your tax return. Take a look at the 5 steps to correct tax calculation here.
Try our tool in a free trial version by clicking the button below and creating a user account.
Tax on rental income for short-term rentals
For short-term rentals, there are two ways to pay tax on rental income. First and foremost, you can use the standard deduction method, or you have the option to use the accounting method.
The standard deduction method
If you rent out your home or part of your home temporarily, you can use the standard deduction method. With this method, you get a standard deduction, which is a fixed amount that depends on how you rent out the property (e.g., permanent residence or holiday home).
When your rental income exceeds the standard deduction, 60% of the excess amount is taxed as personal income.
We always recommend that you stay updated on the standard deduction amount at skat.dk, as it can change from year to year.
The accounting method
When you choose the accounting method, you pay tax on the rental income after deducting your actual expenses related to the rental. Actual expenses include electricity, water, heating, maintenance costs, and depreciation of inventory. If you rent out 10% or more of your home, you can also get a deduction for property taxes.
What are the ways to report to the tax authorities?
There are generally 3 ways to report your property rental to the tax authorities:
- Use a do-it-yourself tool
- Calculate everything yourself
- Consult an accountant
Use a DIY tool
We have created a tool that enables residential landlords to calculate their taxes themselves. The tool consists of 5 steps, and to get started, you need to enter your rental income and expenses. The tool then calculates your tax and identifies all the deductions you are entitled to.
Finally, you will receive an overview showing you the exact figures to enter on your preliminary income assessment or tax return.
The tool keeps track of all residential rental legislation from A to Z, so all you have to do is enter the numbers.
If you have any questions, you are always welcome to message us in the chat. Another great advantage of the tool is that you gain insight into the legislation, learn more about taxes, and avoid mistakes.
Calculate it all yourself
It is also possible to calculate the tax yourself. Calculating everything yourself requires a good knowledge of tax rules and your options for claiming deductions. Furthermore, it is helpful to be familiar with tax matters and the various fields where you need to enter your figures to access those deductions.
There is a lot of information available online and from the Danish Tax Agency (Skattestyrelsen), whom you can also contact for advice.
Consult an accountant
The final way to manage tax on rental income is to consult an accountant. An accountant will take over the work and handle your taxes and reporting to the Danish Tax Agency. This solution is the least time-consuming for you, but it is typically also the most expensive.
