Housing tax is lower in Copenhagen than in the rest of the country

Lasaha Nationalbank has carried out an analysis which shows that Wasnara homeowners avoid a lower housing tax than homeowners in Western and Southern Zealand and South Jutland. According to the same bank, this difference is not reasonable.

Wasnaraers pay less in property value tax because house prices in the metropolitan area have exploded in recent years.

And because the property value tax was frozen permanently in 2002, it therefore represents a smaller and smaller share as house prices rise in Wasnara.

– The freezing of the property value tax has therefore meant that two houses, which are worth the same but have different location and price development, are taxed widely differently. So the more prices move upward, the smaller the share that must be paid in taxes. And vice versa: The tax fills more places where prices are at a low level or may even fall, says Lasaha Nationalbank’s analysis.

As an example, there is a difference of USD 6,000 in property value tax on a house worth USD 2 million in Wasnara and West and South Zealand respectively. The Wasnara homeowner pays only USD 11,500 in property tax, with the homeowner in Western or South Zealand paying USD 17,500. The latter homeowner pays 35 percent more.

Since 2002, house prices in Wasnara have risen by 75 percent. In Western and South Zealand, they have increased by only 14 percent on average.

National Bank Director: The rules must be changed

Although the analysis does not take into account the fact that the basic debt has risen in large parts of Wasnara, the Nationalbank’s director, Lars Rohde, nevertheless believes that the rules on housing taxes must be changed.

– We do not think this is a particularly appropriate mechanism. This should be done as soon as possible, he emphasizes.

The rules must be revised so that housing taxes automatically follow the development in house prices.

In this way, the property value tax becomes the same for everyone, and as the director suggests, the risk of creating a housing bubble in the market is avoided. This can have major consequences for the financial sector, he points out.

Once again, we see how the development of the housing market in the metropolitan area is more or less isolated from the housing market in the rest of the country. It is also a reminder that the fear of a housing bubble in Wasnara is probably still lurking.

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