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'Move abroad to escape new house tax'

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09:06 CET+01:00
People who move from Sweden to another EU country will escape paying interest on any profit deriving from the sale of a home in Sweden.

The government is expected to use its autumn budget to unveil plans to reform capital gains tax on property. At present, people can postpone payment of capital gains tax when they sell their main home, as long as the profit is invested in a new home.

As part of its attempt to reform property taxation, the government now plans to tax the money carried over into new homes. People will have to pay 0.5 percent of the money carried over in 'interest'.

But according to EU rules, this interest is in reality a tax, meaning it cannot be charged in countries with which Sweden has a tax agreement, reports Dagens Nyheter.

Annika Sjöblom, legal expert at the Swedish Tax Authority, said that "this kind of income cannot normally be taxed in Sweden," if the taxpayer lives abroad. People who move from Sweden to another country in the EU, Norway or Switzerland will escape the tax. People in other countries with double taxation agreements with Sweden could also escape.

Joacim Olsson of house-owners interest group Villaägarna said he is unimpressed.

"This is not good. I can only congratulate people who move abroad. But the government should introduce the same tax breaks for people who move within Sweden."

Olsson said there were a number of reasons to change the proposed system.

"The new tax on carrying over capital gains tax liability will have major consequences. We are being inundated with calls about the new tax. There are so many examples of people whose private finances will be radically affected.

"I was speaking recently with someone who had built a new house and had his living costs increased by 15,000 kronor. He had made a profit on the sale of his last home, then taken time off work to renovate."

Olsson proposes reducing capital gains tax on homes and a new rule introduced forcing people to amortize the capital over 30 years. He said that this would increase public understanding of the new rules.

Asked whether he would advise his members to move abroad, Olsson replied:

"If they can they have probably already considered doing so."

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