In order for the client to able to use the ROT deduction, he or she must own the property where the work is carried out. Frequently, the ownership is recorded in the register of the Swedish Tax Agency (Skatteverket) or that of the Land Survey of Sweden (Lantmäteriet). The Swedish Tax Agency will, in the first place, turn to you as service provider to be able to verify that the client is the owner of the property where the work is carried out.
Apart from the fact that the client must own the property, he or she must also use it as a residence. This requires the building to be equipped with installations and conveniences that are integral to a residence or dwelling.
A dwelling refers to premises that the client uses and owns wholly or substantially for housing purposes within the EES area. A garage, store and laundry also count as housing. Moreover, a second home, time-share apartment or country cottage that the client owns is also counted as a dwelling or home. Common areas in a block of flats, e.g. entrances and staircases are not counted as housing, however. The client does not obtain a ROT deduction for work that is carried out:
If the client rents out his or her property or apartment during parts of the year, he or she cannot obtain a ROT deduction for the work carried out during the periods when he or she does not use the dwelling.
The client can obtain a ROT deduction for work carried out in his or her parents’ home, provided that the client has incurred expenses for the purpose of this work. In addition, it is necessary that he or she owns the dwelling, either wholly or in part.
It is common for the client to want to renovate the newly acquired property, sometimes indeed before he or she has moved there. If the client does not live in the property where you carry out the work then nobody else may use the property as their residence when the work is carried out.
When the work is carried out immediately after the acquisition of the property, the registers of the Swedish Tax Agency (Skatteverket) and the Land Survey of Sweden (Lantmäteriet) are not updated. The Tax Agency, therefore, sometimes needs to request documentary material that verifies that the party hiring your services actually owns the property where the work is carried out.
Consequently, it may be sensible to ask for a copy of the purchase documents and have them easily available for the Swedish Tax Agency’s administration.
Hidden ownership refers to a case where two or more persons have participated in the acquisition of a property, but all the part-owners have not applied for registration of title nor are recorded as owners in any register.
If the client is a hidden owner of a single or two-family housing unit (småhus), freehold apartment or housing association apartment (bostadsrätt), then a ROT deduction is not allowed for the work that is carried out. To be entitled to a ROT deduction it is necessary that he or she makes the ownership visible by way of a contract, and registration with the registration authority.
Where the property is owned by the estate of a deceased person, of which the client is a part-owner, then he or she can obtain a ROT deduction for the work that is carried out and paid for after the estate inventory has been registered with the Swedish Tax Agency. Unless the client is the sole party to an estate, a distribution of the estate must have been instituted for either him or her to be able to obtain a ROT deduction. It is only the work carried out after the distribution of the estate has been carried out that confers the right to a ROT deduction.
Olle owns part of his childhood home but his mum continues to live at the house. Olle and his mother arrange to have the roof of the house renewed. Since Olle has gone away and will not be able to pay for the work within a reasonable time, he requests the firm carrying out the work to invoice his mother. The firm finishes the job and Olle’s mother immediately pays the bill with her own money.
Can Olle obtain a ROT deduction for the work that is carried out and paid for?
No, Olle cannot get a tax reduction for the work that the firm has carried out on the house since he has not incurred expenses for the work in question. If Olle had incurred expenses for the work, then indeed he would have been able to obtain a ROT deduction since he is part-owner of his parent’s home.