Owning a second property in Denmark has a lot going for it: done well, it generates rental income, builds equity, and doubles as a personal retreat; bought without planning, it quietly becomes a second job in tax returns, maintenance, and void weeks. Danish property taxation rewards people who understand the pieces and penalises those who assume a holiday home behaves like a primary residence. The rules are stable and learnable, though: two property taxes, a clear schedule for taxing rental income, mortgage rules that differ for non-owner-occupied homes, and a distinct set of considerations for the summer houses that line the coast. This guide walks through each of them so you can judge whether a second property is a sensible step.
Why buy a second home in Denmark?
Second properties get bought for a few different reasons, and your primary motivation should shape some of your choices.
- Rental income: a monthly cash flow from long-term or short-term tenants who pay to live in a home you are not using.
- Capital appreciation: Danish property values have historically risen 3-5% annually, building equity over time even if the annual rent only covers costs.
- Personal use: many owners use the property themselves part of the year and rent it out the rest.
- A sommerhus: Denmark’s coastal and rural summer houses are popular for weekend getaways and summer holidays, and can be let out between visits.
Each motivation carries different tax and management implications, so be clear on your primary goal before you buy.
Property taxes on a second home
Denmark taxes real estate through two overlapping systems, and a second property means paying both on each one — the primary residence shields nothing extra.
Ejendomsværdiskat (property value tax)
Ejendomsværdiskat is charged on the assessed value of the properties you own:
- 0.92% on the portion up to DKK 3,040,000
- 3% on the portion above DKK 3,040,000
For a second property the higher 3% rate applies above the threshold on that property. Take a pair of homes costing DKK 2.5M and DKK 3.5M: the second property pays 0.92% on the first DKK 3,040,000 of its value and 3% on the remaining DKK 460,000.
Grundejendomsbeskatning (land tax)
Land tax is assessed on the site value of each property. Rates vary by municipality but typically range from 0.5-3.4% of the land value, and it applies to primary residences and second properties alike.
A pair of worked examples shows how quickly the bills stack up:
| Property | Assessed value | Ejendomsværdiskat | Estimated land tax |
|---|---|---|---|
| Primary residence | DKK 2,500,000 | DKK 23,000 | DKK 12,500 |
| Second property | DKK 3,500,000 | DKK 41,248 | DKK 15,000 |
| Total | DKK 64,248 | DKK 27,500 |
The second property meaningfully raises the annual tax bill, so these obligations belong in your yield calculations before you commit — not as a discovery after the first year.
How rental income is taxed
Rental income from a second property is taxed in Denmark at:
- 27% on the first DKK 61,000 of net rental income
- 42% on net rental income above DKK 61,000
Net rental income means gross rent minus deductible expenses, and Denmark is fairly generous about what may be deducted: mortgage interest payments, property management fees, maintenance and repairs (not improvements), insurance premiums, utility costs you pay yourself, and accounting and legal fees connected with letting the property. SKAT expects documentation for every claim, so keep clean, dated records from day one.
The deductibility of mortgage interest does most of the heavy lifting in the early years. A typical example: gross rent of DKK 120,000, minus mortgage interest of DKK 96,000, maintenance of DKK 10,000, and a property manager’s fee of DKK 12,000, leaves net rental income of just DKK 2,000 — and a minimal tax liability on it. Nothing about that is unusual; the tax burden simply grows as the debt shrinks.
Mortgage rules for second homes
Financing a second property differs from a primary residence in four practical ways:
- Down payment: typically 20-30% of the purchase price, and some lenders ask for more on non-owner-occupied properties.
- Interest rates: second home mortgages carry higher rates than primary residence loans — expect roughly 0.5-1.5% more.
- Loan-to-value ratio: banks may cap LTV at 70-80% for investment properties.
- Stress test: lenders assess whether you could service both mortgages if rates rose, so an unused borrowing capacity on your main home is not much help here.
Because terms genuinely differ, contact several banks. The realkreditinstitutter (mortgage institutions) such as Realkredit Danmark and Nordea Kredit offer different products for property investors, and small differences in rates compound seriously over 20-30 years.
The sommerhus question
Denmark’s summer houses are a popular entry point into second-home ownership. You may rent out your sommerhus when you are not using it, and short-term holiday lets are common through platforms like Airbnb and DanCenter. Rental income follows the same 27%/42% schedule as any other property — but if you use the house personally for more than a certain number of weeks a year, it can be classified as a private residence, which changes the tax treatment — know the threshold for your letting pattern. Location drives both enjoyment and letting demand: popular areas include North Zealand (Helsingør, Gilleleje), West Jutland (Henne, Søndervig), and Bornholm, with demand varying significantly by place and season. And coastal summer houses wear faster from salt air and weather exposure, so budget in the region of 1-2% of the property value annually for maintenance.
Self-manage or hire a manager?
Running a rental property takes time, and the Danish tenancy framework is not something you want to learn from a costly mistake. Self-management means no management fees and direct control over tenant selection and maintenance — but it also means being on call for emergencies and having a working grasp of Danish tenancy law, the lejeloven. Professional property managers charge typically 8-12% of the monthly rent and bring tenant screening, legal compliance, and maintenance coordination. They reduce your net yield and your control, but the fee is usually worth it for owners who live far away or want genuinely passive income. Companies like HomeAgent and Lejebolig offer management services across Denmark.
Direct ownership or REITs?
Direct ownership gives you full control over property, tenants, and improvements — and with it the management burden; it is illiquid (selling takes months), carries high transaction costs including stamp duty, legal and agent fees, and concentrates your money in one or a few properties. Listed property funds and Danish REITs such as Danske Ejendomme trade like stocks, offer high liquidity and diversification across many properties, and require no management at all. Dividends from them are taxed at the same 27%/42% rates as rental income. Direct ownership can produce higher returns if managed well; REITs trade that upside for hands-off exposure.
A worked example: a second apartment in Aarhus
Here is a second apartment in Aarhus, purchased at DKK 3,000,000 with a 20% down payment:
- Purchase price: DKK 3,000,000
- Down payment (20%): DKK 600,000
- Mortgage: DKK 2,400,000 at 4%
- Annual mortgage interest: DKK 96,000
- Rent: DKK 10,000 a month (DKK 120,000 a year)
- Deductible expenses: DKK 22,000
- Net rental income: DKK 24,000
- After 27% tax: DKK 17,520
That gives a yield on your DKK 600,000 invested capital of 2.9%. It is the appreciation that usually turns a modest cash yield into a serious investment: at 3-5% annually on the DKK 3M property, that is DKK 90,000-150,000 of growth a year, lifting the total return to roughly 5.9-7.9% on the down payment.
Practical considerations for multiple properties
Running more than one second home just narrows the margin for error. Research local rental demand before buying — university cities, employment centres, and tourist destinations generate the most consistent occupancy. Factor in every cost: property tax, insurance, maintenance, vacancy periods, and management fees all erode the net yield, and underestimating costs is the most common mistake. Diversify across locations if you are building a small portfolio, so a weak season in one region is not a portfolio-wide event. And budget for 1-2 months of vacancy a year — a property that sits empty generates costs but no income.
Reference
- Danish second home tax rules: SKAT — Ejendomsværdiskat
- Land tax information: SKAT — Grundskyld
- Rental income taxation: SKAT — Lejeindtægt
- Sommerhus rental rules: SKAT — Udlejning af sommerhus
- Danish tenancy law: Lejeloven
The appeal of a Danish second home is real, but it is a business decision wearing a holiday hat. Price in the taxes and the true cost of running the place, and it can quietly build wealth while giving you somewhere good to spend a weekend; skip the planning, and it can cost you more in a year than it earns in three.