To take out loans is to acquire assets at the same time while at the same time obtaining expenses in the form of interest and fees. You have to pay tax on assets in Sweden, but if assets also entail expenses, such as interest rates undeniably do when it comes to loans, then you have the right to make deductions for these, so-called deductible loan costs. The reason for this is many, among other things, to encourage people to invest, for example in housing, which generates tax revenue. Someone is going to build these homes, someone is going to renovate them and someone is going to broker their sale. Thus, it is believed that deductible borrowing costs are good for the social economy, so they exist.
What loan costs are deductible?
In principle, all borrowing costs are deductible regardless of size and purpose. However, it may be smart to take an extra check if you feel unsure before settling with the declaration, or better yet, before taking the loan. Auditors can help with this, or why not the Swedish Tax Agency, the most important thing is to look up at a credible source. Often, deductions are something that lenders use from a marketing standpoint and since they want satisfied customers, you will be told the right facts.
If you want to take out a loan to buy a home, then these loan costs are deductible. Likewise if you intend to take out a loan for private consumption. The same goes for fast loans or if you want to take out a loan to buy a car or boat. Thus, most borrowing costs are deductible.
Difference between loan costs
It is important to remember that there are borrowing costs and borrowing costs. Interest rates are certainly tax deductible, but you must not forget that there are other fees as well. Examples of these are set-up fees and newspaper fees which are an expense for the borrower but not for the sake of deductible. Another cost that must not be forgotten in this context is amortization. These are also not deductible, which can be good to keep in mind when negotiating how big one’s repayments should be.
Differences between loans
Since some borrowing costs are deductible and others are not, what you will have to deduct will vary some depending on the type of loan you take. For example, if the loan is for your accommodation, an acquisition of a condominium or a villa, then you can deduct the interest costs. If you take out a sms loan then the situation may be different, depending on how this is laid out. Some quick loans or sms loans pay interest, so these costs are deductible. However, if you have missed an offer on interest-free loans, a loan for which you instead have to pay fees, then you can no longer talk about deductible loan costs and you can tax more.
Important to remember
To put it simply, interest rates are deductible when it is time to declare. However, it must be borne in mind that there are some details and exceptions to the rule that can be costly if you expect to be deducted for them.
An example is something that most people become aware of, namely that the interest rates on one’s CSN loan are not deductible. Since this is many of the first big loans, it may be smart to keep this in mind.
If you have a loan whose costs you want to deduct, then you have to be personally responsible for the payments on this. For example, if your mortgage is on your partner, you cannot deduct the costs, even if you pay for them.