The public property assessments (ejendomsvurderinger) have been the subject of intense debate for over a decade, and with good reason. Since 2011, homeowners have struggled with outdated assessments that have led to unfair tax burdens.
But why are these new assessments so crucial, and how will they affect homeowners? Read on here
Here you can read about: Why do we need new property assessments? The provisional property assessments Retrospective adjustment Homeowners' associations
Why do we need new property assessments? The public property assessments have been a much-discussed topic for the past 10+ years, and with good reason. Since 2011, property tax (ejendomsværdiskat and grundskyld) has been calculated and increased on the basis of outdated assessments. However, the prospect of new assessments was a long way off, which is why a limit was set on how much the tax could rise, and a freeze scheme (indefrysningsordning) was introduced, so that tax increases could be frozen. This meant that increases since 2011 have, for many properties, been frozen and only had to be paid upon a sale. This scheme was referred to as an interest-free freeze loan.
In addition to the public property assessment for 2020 (which many households have still not received), we are now eagerly awaiting a "new property assessment" built on different principles. The new assessments are meant to be more accurate and correspond more closely with market prices. There is therefore an expectation that almost all property assessments will rise – but will the tax rise too? According to the Danish Tax Agency (SKAT), property tax will only rise for about 1 in 5 homeowners. Simply because the new scheme ensures that even though assessments rise, tax rates fall. In addition, SKAT operates according to a so-called precautionary principle, meaning they deduct 20% of the assessment before calculating the property tax.
The provisional property assessments The property assessment for 2020 forms the basis for property tax in 2021, 2022, and 2023, and since the property assessment for 2022 is delayed, SKAT chose to issue provisional assessments to form the basis for property tax in 2024. This provisional assessment is to be replaced by the 2022 property assessment, which is expected to arrive in 2025. If there is a difference between the provisional assessment and the 2022 property assessment, the property tax will be adjusted. How the property tax is adjusted, and what effect this has, depends on when you bought your property.
You owned your property on 31 December 2023 and your property tax rises according to the provisional assessment
Owners of properties as of 31 December 2023 are automatically entitled to a tax discount if the provisional assessment determines that your property tax will rise. The tax discount ensures that, as an owner, you will not have to pay more property tax in 2024 than you did in 2023, even if the size of the provisional assessment would normally mean you would have to pay more in tax.[1] This discount is calculated based on the provisional assessments, but you retain your discount even when the new 2022 property assessments arrive. If there is a difference between the provisional and the new assessment, your discount is simply adjusted accordingly.
However, we cannot avoid annual increases in property tax. This means that any tax increases from 2025 onwards must still be paid by you, even though you owned your home as of 31 December 2023. In principle, this means you pay the property tax you paid in 2023, plus any increases from 2025. But the jump in tax for which you received a discount, you keep that discount until you sell the property, and it does not have to be repaid.
If you would like to keep your property tax at the level it was in 2023, you have the option to do so. SKAT has continued the freeze scheme (indefrysningsordning) in a new format. This means that the gradual increases coming from 2025 can be frozen instead of being paid. These increases are converted into a loan, which must be repaid when you sell the home. However, you should be aware that the new freeze scheme adds interest to the "loan." This interest rate is not yet known, but for comparison, the interest rate for frozen tax from 2023-2024 is 3.57%.
In addition, be aware that SKAT has automatically enrolled all homeowners, and will enroll future homeowners, in this scheme. So always remember to check your preliminary tax assessment (forskudsopgørelse) if you do not wish to freeze your tax increase.
You owned your property on 31 December 2023 and your property tax falls according to the provisional assessment
Your property tax is adjusted so that from 2024 you pay less than you did in 2023.
If the new 2022 property assessment does not match the provisional assessment, and you suddenly face a tax increase – do not worry. You are then covered by the tax discount. If the property tax falls further, you get money back. The same applies if you have been covered by the tax discount and the new assessment shows that you have to pay lower property tax than in 2023 – then your tax discount disappears, and you get money back instead.
Homeowners in this category can also make use of the new freeze scheme if they do not wish to pay the ongoing increases from 2025.
You only owned your property from 1 January 2024 (or later) and your property tax rises according to the provisional assessment
First of all – congratulations on the purchase of your new home!
By taking over a home from 1 January 2024 onwards, you are covered by different rules than those who owned their home in 2023. You may therefore find that you pay either less or more than the previous owners. Regardless of what you pay, this property tax is calculated on the basis of the provisional assessment. When the 2022 property assessment arrives, your 2024 property tax will be adjusted retrospectively.
If the provisional assessment was higher than the 2022 property assessment, you will get a refund for what you have overpaid. If the provisional assessment was lower than the 2022 property assessment, you must pay a residual tax (restskat), and interest will be added to this residual tax if it is not paid. This residual tax must be paid and cannot be frozen. However, like other owners, you can freeze future increases from 2025 through the new freeze scheme.
It should be noted, however, that SKAT does not expect major fluctuations between the provisional assessments and the 2022 property assessments.
Retrospective adjustment If you own or have owned a home during the period 2021-2023 where the 2020 property assessment had not been issued, the tax for 2021-2023 is calculated on an "outdated" basis, as it is calculated based on old property assessments from the 2000s. When the 2022 property assessment is issued, it may indicate that either too little or too much property tax has been paid during the period. As an owner, you may therefore experience either getting money back for this period or being met with a supplementary claim.
If you bought a home in the period 2021-2023, where the 2020 property assessment had not yet been issued, you should be aware that any supplementary claim or right to repayment falls to the current owner. This means that the owners during the period must themselves settle any supplementary claim or right to repayment between each other.
If you have bought or sold during this period, you will therefore also have seen a clause about this in the purchase agreement, which obliges seller and buyer to settle this when an adjustment arises.
There are still homeowners waiting for their 2020 property assessment, and SKAT does not expect the last assessments to arrive until the second half of 2024. An adjustment can therefore be expected right up until 2025. However, those who can expect compensation can look forward to this, as a tax-free interest compensation of 6.2% per commenced year is added.
Homeowners' associations The Minister of Taxation has stated that homeowners' associations (grundejerforeninger) will have to pay land tax (grundskyld) on the value of their shared areas (fællesarealer). Under the new Property Assessment Act, the shared areas will be categorised as an undeveloped commercial plot, which will be assessed at one tenth of the land value per square metre for a standardised single-family house with the same location and a plot of standard size.
The first charge for land tax on shared areas comes in 2025. However, the full payment must be phased in over a period of approximately 21 years, which is why the full amount will not be charged immediately. It may nevertheless be important to be aware of this if you buy a property that is a member of a homeowners' association.
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