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Landlords 'can buy out tenants tax free'

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12:59 CEST+02:00
Landlords can buy tenants out of their contracts tax free, according to a new ruling from the administrative court of appeal in Stockholm.

While it is illegal for a tenant to sell their rental contract on to another tenant, it is both legal and tax-free to sell it back to the property owner.

"This loophole must be closed before rental properties start being emptied out," said P.O. Brogren at the Swedish Tenants' Association.

The court made the decision in the case of a tenant who received 150,000 kronor to leave his apartment o Styckjunkargatan in central Stockholm. Both the tax authority and the district administrative court thought that the income should be taxed, arguing that income deriving from possession of an asset should be taxed as capital.

The appeal court dismissed this argument, saying that as there was no market for paying to take over rental contracts, the contracts cannot be regarded as an asset and therefore cannot be taxed.

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