If you and your spouse own a rental property together, it is natural to ask how income and expenses should be reported to the Danish Tax Agency.

Many believe that the result must automatically be split 50/50, but that is not actually what the law states. However, practice often looks different.

Who should be taxed on the rental income?

As a general rule, the result is taxed in the hands of the spouse who manages the rental business.

This is typically the person who is primarily responsible for the day-to-day operations, for example by:

• being the point of contact for the tenant
• collecting rent
• arranging maintenance
• managing the rental

As a starting point, it is also this spouse who includes the income and deducts the relevant expenses for tax purposes.

Can we split the result between us?

Yes, you can.

If you both participate significantly and more or less equally in the operation of the rental, you may have the option to split the tax result between you.

This requires, among other things, that the conditions for joint operation of a business are met. Therefore, it is not something all spouses can automatically choose.

Can it affect the tax?

Yes.

How the result is reported can affect your total tax. This depends, among other things, on:

• your other income
• if one of you pays top-bracket tax
• if one of you has unused tax deductions
• how the rules on allocation can be applied to your specific situation

That is why it can be advantageous to consider the allocation before you report the year's result. Some choose, for example, to have the person with the lower salary be the one to report. This way, you pay the least amount of tax in total if one of you pays top-bracket tax.

How do we do this in practice?

Once the year's result has been calculated, it must be reported according to the rules that apply to your situation.

The most important thing is therefore to first calculate the result correctly and then decide how it should be reported.

Get help with calculation and reporting

Reportability helps residential landlords calculate tax and guides them through the reporting process. If you own the apartment together, the tool can also help.

It helps with, among other things:

• calculating the year's taxable result
• taking into account the rules on allocation between spouses
• showing how the result should be reported
• making the entire process simpler and more manageable

In short

If you own a rental property together, it is not necessarily the ownership share that determines who is taxed.

The starting point is that the result is taxed in the hands of the spouse who operates the rental business. In some cases, however, the result can be split between you if the conditions in tax legislation are met.