Home lawn mowers that get the biggest tax cut

The budget for 2021, which the government recently presented with the support of the coalition parties Centern and Liberalerna, contains a proposal to eliminate the tax, a kind of interest, on the deferral that around 620,000 Swedes have of old housing gains.

A little under the radar, the news of the abolition of the deferral fee has passed. Compared to the much more striking but more modest tax cuts of a few hundred crowns that ordinary employees will receive next year, there are thousands of households with much more money to raise.

For many homeowners living in the most expensive housing areas, the abolished deferral rate will be a real cut. TT has asked the Swedish Tax Agency how many have previous deferrals of SEK 3 million or more. It turns out that more than 3,000 Swedes now get a tax cut of SEK 15,000 or more. 470 of them have a deferral of five million or more. They can take home at least 25,000 SEK in tax cuts. 45 homeowners have old tax-free earnings of 10 million or more, corresponding to at least SEK 50,000 in reduced taxes / fees next year.

This, of course, largely applies to luxury villas that have been sold, in exchange for even more expensive properties (a longer deferral is possible when the seller buys something more expensive). Part of the reason is that the deferred interest rate was introduced as a partial financing of the property tax eliminated just over ten years ago, something that mostly benefited the richest part of the population, a kind of double benefit for the richest.

– The abolished property tax also made their properties more valuable, so when they sell them they make a higher profit, plus they now benefit when the deferred interest rate is removed, says Åsa Hansson, associate professor in economics at Lund University and with tax as an area of ​​specialization.

Paying tax-deferred interest is reasonable, as it becomes less burdensome over time, according to Åsa Hansson.

The Government bill also outlines the consequences of the proposal to increase income differences:

“In general, this means that people with a higher financial standard benefit from the proposal to a greater extent than people with a lower financial standard. Therefore, the proposal is considered to lead to somewhat reduced economic equality.”

Several of the most important advisory bodies are critical and reject the proposal for various reasons.

One is that the state will lose huge tax revenue. The Government estimates this to be just under SEK 2 billion, based on the size of the deferred interest payments currently being made annually. But a likely scenario is that more people request a postponement when it is most advantageous. Therefore, the National Institute for Economic Research estimates that the state annually loses between SEK 5-10 billion in tax revenue from housing gains.

The Swedish Financial Management Authority (ESV) is also on the same line:

“The proposal likely means that a higher proportion of home sellers will choose to defer capital gains and therefore use the interest-free tax credit. This, in turn, will lead to a reduction in capital gains tax revenue over a relatively long period of time, ”ESV writes in its response to the query.

The abolition of the deferred interest rate aims to increase migration flows in the housing market. But both the advisory bodies and Åsa Hansson doubt.

– It will probably be a marginal effect, he says, adding that there are significantly more effective tax measures to achieve that effect.