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Municipalities that have to reduce the tax rate from five to four per thousand budget for up to a 20 percent drop in property tax revenue.
MUST CUT: Tvedestrand currently requires the maximum allowable property tax rate of five per thousand. Now they have to cut to four and figure a 20 percent reduction in their income. Here from idyllic Lyngør.
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A total of 101 municipalities are forced to cut their property tax rates, since all exceed the new maximum limit of four per thousand that the government has set in the state budget for 2021.
Show an overview Owners have prepared for E24.
– We are losing millions. This is income that the municipality had needed, says the mayor of Tvedestrand, Marianne Landaas (H) to E24.
The idyllic southern borough currently uses the highest tax rate allowed on property, which is five per thousand.
Forced to cut: Tvedestrand Mayor Marianne Landaas (H) says the revenue could have been needed, and is now considering a change to the lower deduction that may recoup some of the millions in lost property taxes.
Photo: Right
– We needed the income
Next year, the government will lower the cap to four per thousand, and Tvedestrand is among the municipalities that budget with the biggest revenue cut – about 20 percent reduction in property tax from 2020 to 2021.
– Of course it is boring to lose that income. This will be felt, says Landaas.
– At the same time, you cannot escape the fact that five per thousand is quite a lot, especially for owners of vacation homes. For them, this is good news, continues the mayor.
Homeowners Secretary General Morten A. Meyer says he is pleased that the government is lowering the top tax rate to four.
– But on behalf of the owners of the country, we wanted the unjust and antisocial property tax to be completely abolished, he tells E24.
Read on E24 +
Here’s how your wallet is affected by next year’s state budget
Many municipalities are stuck in the tax ceiling
The general trend in recent years has been that Norwegian municipalities have gradually increased the property tax, at the same time that the FRP has gained support to gradually lower the ceiling on how much municipalities can collect.
– Therefore, there are quite a few municipalities that now have to reduce their rate, says Carl O. Geving, director of the Norwegian Real Estate Association.
And that’s a total of 101 of them, homeowners numbers show. All other things being equal, this means a lower tax bill for municipal homeowners.
These are the municipalities that have reported the highest percentage of reduction in property tax in 2021, according to the summary of owners:
As the table above shows, homeowners in various municipalities can expect a 20 percent reduction in property tax. Tvedestrand, for example, budgets with a drop in revenue from 30.8 million to 24.6 million.
Nearly all of the municipalities that calculate the largest tax cuts currently use the maximum tax rate of five per thousand.
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You can increase the tax even if the rate is reduced
At the same time, it is not automatic that the 101 municipalities that have to reduce their rates to four per thousand will give homeowners a lower tax bill.
This is because the tax burden on housing is also determined by other variables that can be modified. In addition to the tax rate, your final bill is affected by the lower deduction and how you calculate your home equity base.
Here, some municipalities use appraisers, while others rely on figures from the Tax Administration. Depending on the method, houses that are basically identical may have different estimates of value and therefore different property taxes. The same home can also undergo significant changes in value in municipalities that undergo a property revaluation.
Meyer in Homeowners cautions that some municipalities will do just that now:
– We see that several municipalities are making adjustments to maintain the total property tax. This is done through new evaluations. Unfortunately, this means that homeowners in some municipalities will experience a significantly higher property tax than last year, even at a lower tax rate, explains the homeowner manager.
Increase property tax by 70 million
Stavanger, Kristiansand, and Moss are among the municipalities budgeting with significantly higher property tax revenues in 2021 than in 2020. The former expects a total tax increase of NOK 70 million.
The mayor of Tvedestrand warns that she will try to recover part of the income that disappears with the lower tax rate:
– We introduced a lower deduction last year. If we eliminate this, we can get around two million, says Landaas.
– How about revaluing the houses at a higher value too, so that maybe you can avoid losing the income from property taxes?
– We cannot do that now, responds the rapporteur, pointing out that municipalities can only re-evaluate every ten years.
