Äkta och oäkta bostadsrättsförening

A Swedish housing cooperative (bostadsrättsförening, or BRF) is either äkta (genuine) or oäkta (non-genuine), and the difference is purely about tax. A genuine cooperative, formally a privatbostadsföretag, is covered by the normal, favourable tax rules for a bostadsrätt. In a non-genuine one you pay more tax as the owner, both when you sell and, in some cases, every year you live there. The cooperative’s own finances can still be strong. This is a cost that sits with you.

The line is drawn at 60 percent. At least 60 percent of the cooperative’s activity must consist of providing homes to its own members, known as qualified use. If the share falls below that, the cooperative becomes non-genuine, usually because it has a lot of commercial space such as shops or offices earning rent. Skatteverket, the Swedish tax agency, decides the status year by year, not the board. The basis for the assessment has tightened in recent years, so a cooperative long treated as genuine can become non-genuine.

When you sell a non-genuine bostadsrätt, the gain is taxed as an unlisted holding: 25 percent instead of the 22 percent that applies to a genuine cooperative. You also cannot defer the tax through an uppskov, and any deferral you carried over from a previous home has to be reversed and taxed straight away when you buy in.

While you live there, an extra tax can apply each year. If your annual fee is lower than what it would cost to rent an equivalent flat in the area, you are taxed on the difference as a housing benefit (bostadsförmån). The tax is 30 percent on five sixths of the benefit. Low fees are common in non-genuine cooperatives, because the commercial rents hold members’ costs down, so this is worth doing the maths on before you bid. If the fee is in line with the market rent, there is no benefit to tax.

How to check: the cooperative’s status is in the annual report (årsredovisning), and the agent should be able to tell you. If it is genuine, you need not think about this any further. If it is non-genuine, ask for a sense of how large the yearly benefit could be at the current fee, and factor the three extra percentage points of capital-gains tax into the day you sell. This does not make the purchase a mistake, but it is a real cost that is easy to miss.

Heimer reads the cooperative’s annual report for you and flags whether it is non-genuine, so you see the tax cost before you place a bid. Paste the listing and you get the full picture.