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PROPERTY

Spring fever hits hot Swedish housing market

Housing prices are once again rising in Sweden, with more and more homes being put up for sale, according to fresh statistics.

Spring fever hits hot Swedish housing market
Houses in Stockholm suburb Enskede. Photo: Jonas Ekströmer/SCANPIX

Experts suggested last month that Sweden's hot housing market could be cooling down after the cost of both apartments and houses remained steady over the winter months.

But new figures by Svensk Mäklarstatistik – the Swedish agency which measures sales by estate agent – indicated on Monday that property prices are once again on the rise, as more and more Swedish house hunters line up to look for a new home for spring.

“After a few months of stagnation, prices are starting to move upwards again. It's particularly evident for houses, with an increase of two percent in greater Stockholm and greater Gothenburg in the past month,” said Per-Arne Sandegren, an analyst at the agency.

According to the statistics the cost of houses has gone up by one percent on average across the country in the past month. Apartment prices have remained steady overall, but have risen by two percent in Gothenburg and one percent in Stockholm and Malmö.

GUIDE: Five questions before buying a Swedish home

More and more keys are also changing hands, said Svensk Mäklarstatistik, with 15 percent more houses and 19 percent more apartments up for sale in February than the same month last year — proof of the hotter-than-ever housing market, said Sandegren.

“The increased number of sales is a trend which has been growing in the past few months.”

The cost of buying an apartment or house rocketed in Sweden in 2015 with February prices showing an average jump of 14 percent for apartments and 10 percent for houses in the past 12 months. 

Many prospective house buyers therefore breathed a sigh of relief after the increase appeared to stall in November-January. However, on Monday property firms said that sales typically dip around the winter months and added that Swedes could expect prices to continue to rise in 2016.

“This is not a unique situation and looking at the same period last year the development was very similar and if it continues to follow last year's trend we will be seeing price increases in the future too,” Tanja Ilic, CEO of realtors Svensk Fastighetsförmedling, told the TT newswire.

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MONEY

How you can lower the monthly cost of your Swedish mortgage

It’s no secret that mortgages in Sweden have become more expensive over the last year or so, as interest rates have risen following high inflation. But did you know there’s a way you can lower your monthly mortgage cost?

How you can lower the monthly cost of your Swedish mortgage

Essentially, when you take out a loan in Sweden, the government gives you a discount on the interest you pay, in the form of a tax rebate.

This doesn’t include interest paid on all types of loans – for example, student loans are not included – but it does include your mortgage.

In order to qualify for the discount, referred to as ränteavdrag (interest deduction) or skatteavdrag (tax deduction), you need to fulfil some requirements: 

  • You’ve paid income tax and at least 1,000 kronor in interest in the last taxation year
  • You have a capital deficit (meaning that your interest costs must be greater than any capital income you’ve earned through interest or dividends)
  • You are either partly or wholly responsible for the loan or mortgage in question

If there are two of you who are both named on the mortgage who fulfil these requirements, you’ll each receive 50 percent of the total tax rebate.

The interest deduction is automatically subtracted from your yearly tax and listed in your yearly declaration, if you fulfil the requirements, meaning you’re likely to get it back as a lump sum when tax season rolls around in April.

How much do I get?

The actual sum you get back varies depending on how much tax and interest you’ve paid during the year, but there are some general calculations which can give you a guideline of what you might get.

You’ll get 30 percent of your interest costs back on the first 100,000 kronor you pay in interest over a year, and 21 percent on anything over 100,000 kronor. 

If there are two of you, you each have your own individual tax deduction, even if you’re paying the same loan, so as a pair you’ll get back 30 percent on the first 200,000 kronor, as well as 21 percent on anything over this figure.

To figure out how much you’ll get, you need to first find out how much interest you’ve paid during the year your declaration covers and subtract this figure from your capital income earned through interest or dividends.

If your figure is negative, that means you can subtract this figure from your tax paid during the year. Bear in mind that if you owe tax, then your interest deduction amount will be used to pay it back first, lowering the total amount you receive.

You can also change the proportion of the deduction applied to each partner if you share a mortgage, dividing it 60/40 or 70/30, for example, if you don’t share the mortgage 50/50. You can do this through your bank or by manually changing the figures in your tax declaration.

I don’t understand. How does this make my monthly mortgage payments cheaper?

Here’s where something called skattejämkning comes in. This literally translates as “tax equalisation”, and it’s a way you can spread your tax rebate for interest costs out over a year, lowering your mortgage costs each month rather than of getting a lump sum in the form of a tax rebate during tax declaration season.

In order to equalise your tax, you’ll need to contact the Tax Agency directly, filling out a form with the catchy title of SKV 4302 – Jämkning (ändring av preliminär A-skatt) or using their Jämkning online service.

To do this, you’ll need to have in-depth figures on things like your salary, pension payments, sick pay and any other income like unemployment benefit or maternity or paternity payments, as well as capital income and any business income for the tax year you’re applying for, as well as your expected income for the rest of the year.

If your application is accepted, the Tax Agency will tell your employer to subtract less tax from your payslip each month, effectively meaning that you get your tax rebate for interest costs back in your monthly pay instead of getting it paid out all at once.

Bear in mind that if you do go down this route it’s important that your calculations are correct. If you accidentally overestimate your interest payments or underestimate your tax owed, you could end up being hit with a hefty tax bill once your declaration comes through.

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