What does it mean to deduct the interest on private loans
You can deduct the interest you have paid on private loans in the previous year. You can deduct it against interest income crown for the krona (offset) and if you have had more interest expenses than interest income then you can deduct it against income from work.
- Interest expenses: Eg interest paid on private loans, mortgages and credit cards.
- Interest income: Eg interest that you have received on your savings account or salary account
If the interest you have paid last year is less than SEK 100,000 in total, you can make interest deductions against tax payments of 30% of the amount. For example: If you have had 10,000 in interest expenses, then you can deduct SEK 3,000 on the tax you have paid. If you had received SEK 1,000 in tax refund before the interest deduction, it will be SEK 4,000 (1,000 + 3,000) after the interest deduction.
For interest expenses that exceed SEK 100,000, you will deduct 21% of the interest on the amount that thus exceeds SEK 100,000. Such a large interest cost over a year is usually linked to mortgages, not private loans. Do you have eg Thus, having had SEK 150,000 in interest expenses one year, you can deduct 30% of SEK 100,000 (= SEK 30,000) and 21% of SEK 50,000 (= SEK 10,500). A total of SEK 40,500.
Interest on these loans is deductible
You can deduct interest on:
– Private loans (“blank loans”, “unsecured loans”, “consumer loans”)
– The car loan
– Debt on credit card
– SMS loans and quick loans.
If you have it later, SMS loans and quick loans, you should immediately review the possibility of collecting loans and credits through us for interest rates can be soaring on such loans. And fees, high ones, that these loans are often associated with, are not deductible (see more about it below).
By a deductible loan is meant that you can by law deduct the interest on this loan (ie make interest deductions in the declaration). The interest rate is deductible, one says. Deductible interest rates are interest rates on the above-mentioned loans, but CSN interest and interest expenses incurred for delay cannot be deductible.
Interest deductions are also called interest rate reductions. It is a term that one advantageously uses when settling interest expense against higher interest income and thus reduces interest income that is to be taxed.
How does the interest deduction affect the interest I pay on private loans ?
The effect of the interest deduction is that afterwards you can deduct 30% of the interest you have paid (assuming here that you do not pay more than SEK 100,000 in interest per year on private loans). If you have a nominal interest rate of 10%, the effective interest rate will therefore be adjusted for the interest deduction 7%. Here are some examples:
Nominal interest rate / Interest adjusted for the interest deduction
20% / 14%
15% / 10.5%
12% / 8.4%
8% / 5.6%
7% / 4.9%
6.5% / 4.55%
6% / 4.2%
5.5% / 3.85%
5% / 3.5%
4.5% / 3.15%
4% / 2.8%
3.5% / 2.45%
2.95% / 2.1%
Here’s how to declare the interest deduction
The lower limit for what you can deduct is SEK 1,000 in total interest expenses. Banks automatically report interest income and interest expenses that you have had during the year. These should be visible on your declaration that you receive from the tax authority. This is what is called the pre-printed amounts, and just interest income and interest expenses are shown under the heading Capital on your declaration. Even if these data are included, you should check that they are correct by comparing the amounts with the final statement that you should have received from the respective bank. You will normally receive a final statement, or summaries, by letter at the beginning of the year. You can also see the numbers by logging in to your bank.
If there is no loan and the interest expense you have had for the loan on your declaration, you can write the interest cost and notes in Other information which bank or lender it applies. One reason why it happens is that someone else is on the loan you have taken. Then it shows up the cost in the pre-printed figures on its declaration. You can choose to split the interest cost as below.
At the Tax Agency’s website, wording reads as follows: “It is only for interest on loans that you have personally personally been responsible for payment for which you can make deductions. name in the income tax return (eg under Other information). If the lender is a private person, you should also provide information about his or her personal number or address. ”
Please note that in the pre-printed amount, dividends from funds and shares can be included and that have previously been written interest on savings accounts and the like.
How to split up the interest deduction
The basic situation is that you share interest expenses 50/50 with the one you are on the loan with. So if you have a cost of a loan of SEK 10,000, SEK 5,000 will be prepaid on you and SEK 5,000 on your co-borrower.
It is possible to say in advance to the bank that the interest deduction must be made with a different distribution than 50/50. If you have not done so, it is not too late, but you can adjust it on the declaration by deleting the amount and writing another lower or higher amount (max. The total interest cost of course). If you declare online you can change the amount in the box where the interest cost is stated. Then also make a note on the declaration or in the other field and refer to the co-borrower who has been on the loan and that this will also make an adjustment, the opposite. That is, if you increase the interest expense from SEK 5,000 to SEK 7,000 (an increase of SEK 2,000), the co-borrower shall lower its cost from SEK 5,000 to SEK 2,000.
It can be smart to make such adjustments when the co-borrower does not have an interest income to offset the interest expense against, or any taxes paid by, this on salary. Is your co-borrower eg student and this has not had any salary during the previous year, this person will also not be able to make any interest deductions even if you have had the private loan together. Do not forget that parental benefit and unemployment insurance fund (unemployment insurance funds) are estimated income and therefore one can make interest deductions against tax deducted from these income.
You cannot deduct any charges relating to the private loan
When you take a loan, banks usually charge a lay-up fee. In addition, newspaper fees can be added to the invoices sent out. You cannot deduct such costs in connection with your declaration.
You cannot deduct interest on CSN loans nor interest rate premiums
Interest paid on CSN loans cannot be deducted. There are special rules for these loans. Interest surcharge that you may have received, for example. Not having paid your invoices on time is another example of interest that you cannot deduct.
Interest expense compensation is deductible
In connection with the early repayment of a loan, with a fixed interest rate, one can be obliged to pay an interest expense allowance. This often applies to the early redemption of mortgages. This cost or compensation is counted as an interest expense and is deductible.