Interest deduction: how to get tax relief on home loan interest

In 2026, the indicative tax value of the deduction for interest expenses is around 33,1 % up to the threshold and around 25,1 % above it. Take a loan of 3.000.000 kr. at 4 % interest: the interest expense in the first year comes to around 119.000 kr. on a 30-year annuity loan. If you are single, that gives a tax saving of around 33.900 kr. (50.000 kr. at 33,1 % and 69.000 kr. at 25,1 %). That works out at around 2.800 kr. a month less in tax.

You do not need to do anything to get the deduction. Your bank and mortgage lender report your interest expenses to Skat (the Danish tax authorities) automatically, and you only have to declare interest that is not reported yourself, e.g. on loans from family or friends. The interest deduction is not one fixed amount. Its tax value is a percentage, and it is lower for interest expenses above the threshold. So your real monthly payment after tax depends on how much you pay in interest.

The tax value of the interest deduction: the two tiers and the 2026 rates

Your interest deduction works in two tiers. The tax value of the deduction is not a single fixed percentage, but two different rates, one taking over from the other when your interest expenses pass a threshold.

The difference between the two tiers is due to an extra reduction of 8 percentage points that only applies up to the threshold. The reduction was introduced to spare ordinary homeowners when the value of large interest deductions was cut between 2012 and 2019.

This means your tax saving does not rise in step with your interest expenses. Once you have passed the threshold, the value of every extra krone you pay in interest drops to the lower tier.

If you pay top-rate tax, the interest deduction is not worth any more to you either. The deduction is made in the basis for municipal tax, not top-rate tax, and the reduction up to the threshold is the same for everyone. So top-rate tax does not change the value of the deduction.

A worked example makes it concrete. A single person with 70.000 kr. in interest expenses hits both tiers. The first 50.000 kr. are deducted at 33,1 %, which gives 16.550 kr. The remaining 20.000 kr. are deducted at 25,1 %, which gives 5.020 kr. Add the two together and the total tax saving comes to around 21.570 kr.

The 50.000 kr. threshold and the proposal to cap the interest deduction

The threshold for the higher deduction value is 50.000 kr. per person and 100.000 kr. for married couples. Amounts above the threshold are automatically deducted at the lower rate, without you having to do anything.

• For married couples who live together, negative net capital income is calculated jointly, so the threshold is doubled to 100.000 kr. This applies even if one of you does not have enough interest to use up your half.

• Unmarried couples who live together do not share the threshold. Each has their own threshold of 50.000 kr., and it cannot be transferred to the other.

• If you are single, the threshold is 50.000 kr., and anything above that only gets the lower deduction value.

On top of the two tiers, politicians have proposed a cap of 150.000 kr. per person and 300.000 kr. for married couples. It is a proposal, not current law. If it were passed, interest expenses above the cap could not be deducted at all, which is a different and harsher mechanism than the lower rate.

The calculation shows how much is really at stake. A single person with a loan of 3,6 million kr. and an interest rate of 4,6 % including the mortgage contribution fee has around 165.000 kr. in annual interest expenses. With a cap of 150.000 kr., the last 15.000 kr. would not be deductible, which equals a lost deduction value of around 3.800 kr. a year. It is worth remembering, because that amount is not deducted at the lower rate but disappears altogether.

How married couples split the interest deduction between them

If you are both liable for the home loan, you do not need to agree between yourselves who takes how much of the interest. The split happens automatically when Skat prepares the annual tax statement (årsopgørelse). With two borrowers, you each get 50 %, and with four borrowers, each gets 25 %. If there are three or more of you liable for the loan, the automatic equal split also applies from the annual tax statement for 2025 onwards. Before that, the interest was only split automatically when there were two of you on the loan.

The automatic split is a good starting point, but it does not take account of how your interest expenses are actually divided. If one of you has much larger interest expenses than the other, you can move amounts between you. This requires you to be married and living together, and only the spouse making the transfer needs to make the change.

1. Log on to TastSelv (Skat’s online self-service system) as the spouse transferring the interest expenses.

2. Select Ret årsopgørelsen (correct the annual tax statement).

3. Click the calculator next to box 41 or 42.

4. Enter the amount on the line Beløb, du vil flytte til din ægtefælle (amount you want to move to your spouse).

5. Remember to save.

When you save, the interest expenses are automatically transferred to the receiving spouse’s annual tax statement. If you are not married, you cannot move the interest deduction this way. You can only change the split by actually dividing the debt differently between you, and the agreement must be in writing, signed by all the borrowers and sent to Skattestyrelsen (the Danish Tax Agency).

If one spouse does not have enough interest to use up their 50.000 kr., the unused part is automatically used by the other. That is why married couples always get the higher rate on the first 100.000 kr. combined, however the interest happens to be split between them.

If you are divorcing or separating, the picture changes. The interest is deducted by whoever is liable for the debt, regardless of who has paid it. If you agree in writing, in the division of property or later, which of you will take over the debt, and send the documentation to Skattestyrelsen, the deduction follows your agreement, even if you are both still liable to the bank. It is worth including this in the agreement from the start, so you do not have to go back and correct it afterwards.

How to report the interest deduction on the annual tax statement and the preliminary income assessment

You do not have to enter the interest on an ordinary home loan yourself. Your bank and mortgage lender automatically report the year’s interest expenses to Skat, and they appear on the annual tax statement under capital income in boxes 41 and 42. It is only interest that falls outside the automatic reporting that you need to make sure is included yourself.

The annual tax statement and the preliminary income assessment (forskudsopgørelse) list the same three categories of interest expenses, but under different numbers.

Box 44 and field 485 are for the interest you must report yourself. That includes loans from private individuals, for example, which the bank does not report for you.

The interest deduction on your preliminary income assessment is more than a formality. The figures on your preliminary income assessment set your withholding rate (trækprocent) for the whole year, so they decide how much tax is deducted from your salary each month. If you put your interest costs too high, you pay too little tax during the year and risk owing back tax (restskat) when the year is over. If you put them too low, you pay too much and only get the money back later.

That is exactly why it is important to correct your preliminary income assessment when your loan changes. If you remortgage at a lower interest rate, your interest costs fall, and so does your deduction. If you do not correct the preliminary income assessment, Skat withholds too little tax all year, and you may end up with a nasty tax bill. If you go the other way, to a higher interest rate, the deduction rises, and if you do not update the figures, you pay too much tax during the year instead. You can make changes all year round, so you do not need to wait for a particular date to put things right.

Your monthly payment after the interest deduction: effective interest rate and a worked example

The effective interest rate after the deduction is the rate you actually pay to borrow money. You find it by multiplying the nominal rate by (1 − the deduction value). At a nominal rate of 4 % and a deduction value of 33,1 %, the effective rate comes to about 2,68 % on the part below the threshold. That is the rate to hold up against other loan offers, because it is the one that hits your finances.

The full worked example shows why the threshold matters so much. A single person with 100.000 kr. in interest costs pays about 29.100 kr. less in tax. The calculation is 33,1 % of the first 50.000 kr. plus 25,1 % of the next 50.000 kr. So the first 50.000 kr. give 16.550 kr., the next 50.000 kr. give 12.550 kr., and together that makes the roughly 29.100 kr. Notice that half of your interest costs here only qualify for the lower rate.

A rule of thumb makes it easier to do the sums as you go. For every 10.000 kr. of interest costs a year, the deduction is worth about 3.300 kr. as long as you are below the threshold, and about 2.500 kr. above it. The exact amount depends on how high your municipal tax is. If you want to know what the loan really costs you, look at the rate after the deduction and at the threshold, not just at the nominal rate in the offer.

Once you know the deduction value and the effective interest rate, you have what you need to see your monthly payment after the interest deduction in realistic figures. If you need a home loan, Brikk can put you in touch with a lender. Read more about home loans through Brikk.

Compare home loans on the effective interest rate and your actual payment after the deduction, not on the nominal rate alone.