Next week, the ceiling for RUT and ROT deductions will be raised. For those who want to maximize their tax deductions, there are several things to keep track of.
Most people think that the deductions only benefit rich people who own their homes, says economist Arturo Arques at Swedbank.
The increase, which comes into effect on July 1, means that the ceiling for ROT deductions will be raised from 50,000 kronor to 75,000 kronor. New is also that the ceilings for RUT and ROT deductions are separated.
This means that you can buy tax-deductible RUT services for 75,000 kronor during a calendar year and just as much ROT, i.e. a total of 150,000 kronor. Today, there is a common ceiling of 75,000 kronor.
The tax deduction was previously introduced to reduce black market work in the service sector while making it easier for households to use these services, says Arques.
Deductions for billions
Households have been hit hard economically lately. Purchasing power has fallen and consumers have held back on spending, which has been one of the government's explanations for changing the deduction.
We haven't hired carpenters to the same extent as before, and we haven't gone to the dry cleaner and tailor either. Since it's a fairly labor-intensive business, employment is also heavily affected.
Last year, households made ROT deductions totaling 11.7 billion kronor. When the government's proposal becomes a reality, tax revenues are expected to decrease by 960 million kronor in 2024.
Used by pensioners
With that said, it's not cheap for the state, says Arques, emphasizing that the deductions have been criticized as an expensive subsidy to rich people:
If you look at who makes the most tax deductions, it's partly true that rich people benefit, but if you look at how large a proportion of income is used for deductions, we can see that pensioners also use it a lot.
First, you must have paid taxes exceeding the amount they want to deduct. You can never deduct more than you have paid in taxes. If you have a low or moderate income and buy a lot of RUT services, it's important to keep track.
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The deductions do not apply per household but per person and calendar year. If the household consists of two people who pay taxes, you can together make double the deductions. You can also distribute these services over different years and maybe not do all the renovations in the same year.
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As a consumer, it's always important to hire a company with an F-tax certificate. This applies regardless of RUT or ROT deductions. Here, it's important to choose a serious company and check that they have VAT reporting. It's the company that has to report to the Tax Agency.
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When it comes to ROT, you must own your home and live at least partially in the home. This means that there is also an opportunity to make deductions for vacation homes.
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Services have been gradually added to the RUT deduction. Today, you can deduct for laundry, tailoring, window cleaning, and IT services. It can be about problems with the internet or service if your computer breaks down. It's good to know for people who think that the deduction only applies to people with a lot of money who have bought their homes.
Source: Arturo Arques, economist at Swedbank
