Capital Gains Tax on Property Sales: How to Calculate, Maximize Deductions, and Choose Deferrals

When you sell a property at a profit, you normally need to pay capital gains tax. At the same time, there are deductions that can lower your tax, and in some cases, you can request a tax deferral to postpone the taxation. Here is a practical guide on how the calculation works and what documents are smart to gather before filing your tax return.

1. The Basic Rule: Tax is often 22 percent of the profit

For private residences (for example, a co-op apartment or a single-family home used as a residence by you or a relative), the tax on the profit is effectively 22 percent. This is because 22/30 of the profit is taxed at a 30 percent capital gains tax rate.

Profit = selling price - selling expenses - cost base.

Quick example

• Selling price: 4,000,000 kr
• Agent fee and other selling expenses: 120,000 kr
• Purchase price and improvement expenses (cost base): 3,300,000 kr
• Profit: 4,000,000 – 120,000 – 3,300,000 = 580,000 kr
• Tax (approximate): 580,000 × 22% = 127,600 kr

The example is simplified but shows the logic: what you can influence the most is the cost base (purchase + deductions) and which selling expenses you include.

2. What counts as selling expenses?

Selling expenses are costs directly associated with your sale, for example:

• Real estate agent fees
• Cost of an energy performance certificate (for houses) if you paid for it
• Photography, advertisement/marketing, styling (if paid for separately)
• Home styling and moving cleaning can sometimes be tricky gray areas; base it on what is directly linked to the sale itself and save your documentation.

Rule of thumb! Always save invoices/receipts and proof of payment. If you are unsure about an item, include it and verify it against the Swedish Tax Agency's (Skatteverket) guidelines.

3. The Cost Base: Purchase price + improvement expenses

The cost base consists of what you originally paid for the property (including certain acquisition costs) plus improvement expenses. Improvement expenses are often divided into two categories:

A) Capital improvements (new construction, extensions, and remodeling)

Capital improvements are measures that make something new or better than before, such as changing the floor plan, building a deck that didn't exist, installing a fireplace, or adding equipment that wasn't there before. For this type of improvement, there is normally no five-year limit, but you need to be able to prove the cost.

B) Repairs and maintenance (improving condition)

Repairs and maintenance mean restoring or renovating something that already existed, such as repainting, replacing appliances, or refreshing the bathroom and kitchen without remodeling. To be deductible, it usually requires that:

• the measure results in the property being in better condition at the time of sale than at the time of purchase, and
• the expense was incurred during the year of sale or the five preceding years.

Practically, this means that for a sale in 2026, you may need to sort receipts from 2021–2026 for repairs/maintenance, and gather documentation from further back for capital improvements.

4. Common mistakes that cost money

• Missing documentation: receipts, invoices, and bank statements are often required.
• Forgetting capital contributions (for co-op apartments): the housing association can often provide information on the amount.
• Deducting the wrong type of renovation: separate items if part of it is an upgrade in standard and another part is restoration.
• Deducting your own time or tools: your own labor is normally not deductible as an improvement expense.

5. Deferral: When is it worth postponing the tax?

Tax deferral means that (under certain conditions) you can postpone the taxation of your profit when you sell a private residence and buy a new one. This can be relevant if you want to keep more capital for your next home, or if you want to balance your finances between properties.

Since January 1, 2021, no imputed interest tax is charged on the deferred amount, making deferral more attractive to many.

Quick things to consider before requesting a deferral

• Are both the sold property and the new home qualified under the rules?
• How much profit is involved, and what does your overall financing look like?
• Do you want the flexibility to use the money (for a down payment, renovation, or buffer)?

A deferral is not always the best choice in every situation, but it is often worth calculating and comparing to paying the tax right away.

6. Your checklist before filing your tax return

Summary

Property tax is fundamentally based on your profit, but the details in the deductions can make a big difference. The earlier you start gathering documentation, the easier the tax return will be (and the less risk of missed deductions). Tax rules can change, so always double-check with up-to-date information.

Want a clear sales strategy from the start?

A successful sale is not just about the final price – it is also about the right timing, a clear plan, and the right expectations. Contact Notar for a valuation and a plan tailored precisely to your property and situation.