If you are the owner of a small agricultural property, it is very important to keep track of whether there is new mail in your e-box. This is because, in future, new categorizations will now form the basis for the provisional new property assessments that SKAT sends out.
For many, this “recategorization” will mean significant changes in property tax. If you are therefore the owner of a small country property, there is reason to be very careful. On 28 March 2023, the Danish Parliament finally adopted an amendment to the Property Valuation Act, which will now be rolled out in practice and which is the basis for the advanced categorisations.
From and including 11 April 2023, the Valuation Agency will start sending out letters regarding the recategorisation of housing, and if you are the owner of property which is currently categorized as country property, there is reason to pay special attention. If your home is recategorized as an owner-occupied home, it can mean that you have to pay several thousand kroner more in tax each year.
The categorizations are used by the authorities to make preliminary property assessments. As the plan is now, the new property assessments will have legal effect from January 2024.
Significant importance for the tax
The categorizations of the properties form the starting point for the taxation basis, and therefore it is very important that you as the owner of a property are aware of what data and information the authorities have registered about your property, as well as how they categorize your home. As a starting point, the ongoing taxation for agricultural properties will traditionally be less than for ordinary owner-occupied homes, but this may, based on the new assessments, be a thing of the past if the authorities recategorize your current agricultural property as an owner-occupied home.
In principle, there is a set upper and lower limit for properties with between 5 and 15 hectares of land, so it is especially the owners of these who must be aware of which categorization the Valuation Agency assigns to the property in the new assessments received these days. Between 20,000 and 25,000 properties with between 5 and 15 hectares of land are expected to be recategorized, according to the Valuation Agency, and this may result in the property moving from being categorized as agricultural properties to owner-occupied housing. Precisely this mentioned significant difference in which SKAT categorization is at the moment will, other things being equal, have great significance for the annual tax payment, which means that it is recommended to seek advice about what options there are to react in relation to the authorities’ categorization of one’s property.
In that picture, it is important to be aware that the current tax is lower on agricultural properties, but on the other hand, there is no taxation in connection with a sale if you live in owner-occupied housing, so it can be difficult to weigh the advantages and disadvantages.
IMPORTANT deadline of 15 days in relation to acting on the new assessments
Initially, the authorities will send you a letter of intent, which is a kind of proposal for a decision on the categorization of your home. Once it has been sent, you have 15 days to respond to the letter to the authorities. For this reason, it is very important to immediately deal with this notice and seek advice on your legal position.
For example, as the owner and recipient of a notice of demand, you must ensure that the information contained in the letter corresponds to reality, as there may have been significant changes in the actual circumstances, in relation to the information that the assessment agency has in its possession , which is of significant importance on the basis of the assessment.
For the aforementioned reason, it is essential to seek advice quickly, because once the 15 days have passed, the Assessment Agency will make a decision on the categorization of your home, which will either be the status quo or a recategorization. After this, you as a citizen must wait to see whether the decision changes the categorization of your home, a decision that can be appealed within a further six weeks.
It is very complex to weigh the advantages and disadvantages in relation to which categorization your property falls into. You also have the option of switching to the so-called transition scheme, where the home retains its current categorization until a change of ownership, but we would also recommend that this assessment be made after receiving advice on this.
This will mean, for example, that as the owner of an agricultural property that has been recategorized as a private residence, you can be allowed to maintain the property’s status as an agricultural property and thus pay less tax until a change of ownership. You become very much bound by the transitional arrangement, and the choice cannot be changed. If, for example, you want to rebuild or demolish a building, you fall out of the transition scheme.
Discuss your options with DreistStorgaard
If you have questions about the assessments received or if you are interested in having your appeal options assessed, you are very welcome to contact us for a discussion on how we can assist in securing your legal position in this situation as best as possible.
Contact us on 56 63 44 66 or kontakt@dslaw.dk .
