Financing a House or Flat Purchase

Information about applying for a mortgage, as well as fees and tax on property in Denmark…

Most property purchases are financed by applying for a mortgage from a bank or mortgage lender. There are no legal restrictions on foreigners gaining access to finance and mortgages in Denmark.

Before approving a mortgage a lender assesses an applicant's ability to repay the loan based on their job and salary.

Buyer's certificate

It is advisable to get a buyer's certificate from the chosen mortgage provider confirming the details of the agreed finances. This allows a quick offer to be made on a suitable property as it gives a seller proof of the ability to make a purchase.

It is not uncommon to get a mortgage for up to 80 percent of the value of the property to be purchased. Repayment periods range from ten to 30 years.

If a property is being purchased using a mortgage, then it is a legal requirement to have building and fire insurance.

Fees

The following fees must be paid when buying a property in Denmark:

  • Fees for the final contract, which are equally shared between the buyer and the seller
  • Lawyer's fees (if used). The amount owed depends on the amount of work involved in the sale and the value of the property
  • Legal fees associated with arranging a mortgage
  • Stamp duty and associated costs (0.6-1.5 percent of the property value)

Property Tax

Owning property in Denmark makes an owner liable for several forms of property tax:

  1. Property value tax: This is calculated based on the value of the property and the amount is reassessed every other year. Property value tax, while not part of income tax, is calculated separately but collected with income taxes. Property taxes are progressive. Reductions in property tax are available to those who bought their property before 1 July 1998. Old age pensioners also qualify for reductions in property tax. The property value tax is one percent of the value up to DKK 3,040,000 and three percent of the remainder.
  2. Municipal property tax: This is a land tax, based on the value of the land and is calculated at 0.1 percent of the value of the land. It is the responsibility of municipalities to set land taxes, which must be paid by home owners in the municipality. These taxes are set between 1.6 percent and 2.4 percent and may be lower for agricultural and forestry land. The average land tax is 2.4 percent. Services such as refuse collection must be paid on top of these land taxes.
  3. Real property transfer taxes: Payable on the transfer of a title of a Danish property. The amount payable is 0.6 percent of the sales price or the public evaluation (whichever is highest) rounded up to the nearest DKK 100. A registration duty is also charged for registering ownership of a property.

Related Information

  • For information from the Danish Ministry of Foreign Affairs on property purchase in Denmark: Click here