| Scenario | Annual interest cost | Proportion for subletting | Deductible interest cost |
|---|---|---|---|
| Fully sublet flat | 60,000 SEK | 100% | 60,000 SEK |
| Half of flat sublet | 60,000 SEK | 50% | 30,000 SEK |
| Room sublet in house | 100,000 SEK | 25% | 25,000 SEK |
When you sublet a flat, you can deduct interest costs from your mortgage on your tax return. It is one of the most important tax reliefs for small-scale landlords.
Interest relief is a direct reduction of your tax liability.
How interest relief works on subletting
Interest relief is governed by tax law and applies to all landlords who borrow money to invest in their home. The basic rule is simple: you can deduct all interest costs that are directly connected to the part of the property you sublet.
Which interest costs can you deduct?
You can deduct interest on:
- Mortgages for the entire property (if you sublet one flat and live in another)
- Mortgages for a tenant-owned flat (bostadsrätt) or leasehold you sublet entirely
- Loans for renovation or furnishing of the sublet part
You cannot deduct interest on loans for furniture, appliances or other movable goods that are not an integral part of the home.
Calculation when you live there yourself and sublet at the same time
If you own a two-bedroom flat, live in one room yourself and sublet one room, you must divide your mortgage interest proportionally. If you use half the area for subletting, you can deduct half of your annual interest cost.
Interest relief on your tax return
Interest relief is reported on your income tax return (form K4 or equivalent with the Swedish Tax Agency (Skatteverket)). You must:
- Calculate your total interest cost for the year
- Divide it between your private home and the sublet part
- Report only the deductible part
Skatteverket often checks interest relief for subletting, particularly if the deduction seems disproportionately large compared to your rental income. Make sure you document your division clearly.
Interest relief combined with other costs
Interest relief is only one of several possible deductions when subletting. You can also deduct:
- Maintenance and repair costs
- Insurance for the sublet part
- Property tax (if applicable)
- Estate agent fees and advertising costs
- Administration and bookkeeping
Some landlords focus so much on interest relief that they forget other important deductions. Systematic bookkeeping of all expenses is therefore essential.
Limits and important restrictions
Tax-free amount for subletting
Under the Private Rental Act (2012:978), part of the rental income from subletting is tax-exempt. This applies only to rental income, not deductions. Interest relief applies on your tax return regardless of this limit.
Interest relief reduces taxable income from subletting.
Interest relief cannot create a loss
A common misunderstanding is that interest relief can create a negative result from subletting that you deduct from other income. For subletting there are restrictions—you cannot have a loss on the subletting activity. If your interest costs are larger than your rental income, you cannot use the full interest relief.
Practical tips to maximise interest relief
1. Document the division clearly
If you own the property together with a partner and only one of you sublets the part, or if you live there yourself and sublet a part, document this in writing. A simple note with areas and division is enough to avoid disputes.
2. Use current interest rates
Interest relief is calculated based on the actual interest rate you pay. If your interest rate changes during the year you must calculate the average cost.
3. Keep all loan documents
Keep all loan agreements, interest statements from your bank and mortgage deeds. Skatteverket may request these during an inspection.
4. Combine with other deductions
Do not just deduct interest. Make sure you also report:
- Repairs and maintenance
- Insurance
- Property tax
- Estate agent costs when selling to tenants
Many landlords lose money by not documenting these expenses.
Interest relief and new subletting rules 2026
The new rules for subletting 2026 do not change interest relief itself, but they affect which sublettings are legal. If you sublet without following new requirements you may lose the right to the deduction retroactively.
See also our guide on tax on subletting for a complete picture of which income is taxable.
Example: interest relief in practice
Anna owns a flat worth 1.5 million kronor. She lives there herself but sublets a room.
- Her mortgage: 1 million kronor
- Interest rate: 3 per cent per year
- Annual interest cost: 30,000 kronor
- Sublet area: 25 per cent of the flat
- Deductible interest cost: 30,000 × 0.25 = 7,500 kronor
- Tax rate: 20 per cent
- Tax saving: 7,500 × 0.20 = 1,500 kronor
- Rental income from the room: 6,000 kronor per month = 72,000 kronor annually
- Tax-free amount: 12,000 kronor
- Taxable rent: 60,000 kronor
- After interest relief taxable income becomes: 60,000 - 7,500 = 52,500 kronor
Frequently asked questions
Can I deduct interest relief if I am not registered as a landlord?
Yes, interest relief is a tax law matter and applies regardless of whether you are registered as a business or not. However, you must report rental income correctly on your return. Read more about rules for subletting without permission.
What happens if my interest cost is larger than my rental income?
For subletting you cannot create a loss. If interest cost is larger than rental income you can only deduct interest costs up to the level of your rental income. You cannot carry remaining interest costs forward to the next year.
Do I have to report interest relief on any particular form?
Interest relief is reported on your income tax return (K4 or equivalent). You enter it as a cost under "Subletting of accommodation" or similar heading. Skatteverket has templates for this.
Does interest relief apply to both first-hand and subletting?
Yes, interest relief applies to all residential subletting. Read more about the difference between first-hand and subletting to see which applies to your situation.
This text is general information about interest relief on subletting and does not replace legal or financial advice from an accountant or tax adviser.
