fictitious rental value? How it works and how much you have to pay | Money

When submitting the tax return, it comes up again: the fictitious rental value. A small portion of the value of your house is added to your income. Why is it and how much tax do you pay for it? Ten questions about the fictitious rental value.

1. What is the nominal rental value?
“You have to see it as a certain percentage of the value of your house that is added to your income and that you have to pay tax on,” says tax advisor Elle Loijens from “It’s about a house you live in, not a rental home, second home or cottage.”

2. How do you calculate it?
For homes with a WOZ value between 75,000 and 1,130,000 euros, a percentage of 0.45 percent (in 2022) of the WOZ value applies. Last year, that percentage was 0.5. For example, if your home has a WOZ value of 350,000 euros, the nominal rental value is 350,000 x 0.0045 = 1575 euros. “That amount is added to your income, and you pay income tax on it,” Loijens says. Up to an income of 69,398 euros, it is 37.07 percent (583.85 euros). This is 49.5 percent (779.6 euros).

3. Why do you have to pay fictitious rental value on your owner-occupied home?
According to the Danish Tax Agency, you build up capital with your own home. It provides an advantage over one who rents. Another ‘income’ is the enjoyment of living (an income in kind). These two services are taxed at the nominal rental value.


Tax gets more income because the mortgage interest deduction is being phased out, and that benefit goes partly to reducing the fictitious rental value

Tax Advisor Elle Loijens

4. The fictitious rental value falls this year (from 0.5 to 0.45 percent), so why is that?
The fictitious rental value has decreased in recent years from 0.75 percent (in 2017) to 0.45 percent (in 2022) of the WOZ value. “This decline is related to the reduction in the mortgage interest deduction,” says Loijens. “The tax authorities are getting more revenue because the mortgage interest deduction is being phased out, and that benefit goes in part to reducing the fictitious rental value.”

5. Where can you find your WOZ value?
“In February, you usually receive a WOZ valuation from the municipality, which contains the WOZ value of your home for that year,” says Loijens. “Check if it’s correct, you can object to this if necessary.” If you have lost your disposal, or if you want to know the WOZ value of the neighbors or other homes, you can look at ”

6. What is the ‘villa boundary’?
Homes with a WOZ value above 1,130,000 euros fall above the so-called ‘villa boundary’. Of these, the nominal rental value is relatively higher. Above this limit, the fixed amount consists of EUR 5,085, supplemented by 2.35% of the WOZ value above EUR 1,130,000. For example, the owner of a house worth 1,500,000 euros has a nominal rental value of 5085 euros plus 8695 euros (2.35 percent of 370,000 euros) is 13,780 euros. “It’s putting a heavier burden on people with more expensive housing,” Loijens says.

Homeowners with a WOZ value lower than 75,000 euros have a lower percentage (0.15 to 0.35 percent) fictitious rental value.

7. What if you bought a house halfway through the year?
Tax calculates the fictitious rental value proportionately. Assume that you have lived in one house for ten months and another two months in another owner-occupied house, then you pay 10/12 of the fixed amount based on one house and 2/12 of the other house. ” Even if you buy a home for the first time in the middle of the year, you only pay the fictitious rental value for the months after the purchase.


Only one dwelling falls in Box 1 (taxable income from work and dwelling). This also applies if you have a tax partner

Tax Advisor Elle Loijens

8. What if you have multiple homes?
“Only one dwelling falls in box 1 (taxable income from work and housing). This also applies if you have a tax partner, ”says Loijens. “Any other homes and holiday homes are included in box 3 (income from savings and investments). No nominal rental value is calculated on this. ”

9. What about the mortgage interest deduction?
The mortgage interest deduction is a deductible item, fictitious rental value is a supplement. The effect of both on the level of income tax is best reflected in a calculation. Suppose you have an income of 50,000 euros and a fictitious rental value of 2,000 euros. The taxable income is then 52,000 euros. You paid 3,000 euros in mortgage interest this year. You can deduct this amount from that income (provided you meet the conditions). You ultimately pay income tax of (52,000 – 3000 =) 49,000 euros.

10. What if you have already (partially) paid off on your mortgage?
The Hillen Act was introduced in 2005, an incentive from the government to pay off the mortgage. This law states that the fictitious rental value (in part) lapses if it exceeds the mortgage interest deduction. This is the case if the house (to a large extent) is mortgage free. The Hillen Act will be phased out gradually until 2048. Each year, the percentage from which you can deduct the lump sum falls by 3.33%. This year, the percentage is still 86.67.

Here is a calculation for clarification. Anyone who no longer has a mortgage does not pay mortgage interest, but still pays the fictitious rental value, in the example above 2000 euros. You can subtract that 86.67 percent from this year. That leaves 266.60 euros, which you will eventually have to pay tax on. Even if you pay low mortgage interest rates in relation to the WOZ value, the sum – fictitious rental value minus mortgage interest rates – can be positive and the tax authorities automatically apply the deduction from the Hill Act when filling in the tax return.

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