The reintroduction of the home renovation tax deduction may not benefit homeowners as much as anticipated, according to housing editor Thomas Ambrosius. This assessment comes after news surfaced that the Danish government plans to reinstate the popular tax deduction for homeowners. The Liberal Party (Venstre) has been advocating for the return of this scheme after it was abolished by the previous Social Democratic (Socialdemokratiet) government, and it now appears set to become a reality.

However, the question remains whether this move is actually good news for the economy, which is already operating near overheating levels, Ambrosius points out. The deduction allows homeowners to subtract specific craft services from their taxes, which is expected to lead to increased demand for tradespeople. Yet, this could also mean that the prices for these services rise in line with the heightened demand. “If a carpenter’s hourly wage increases from 500 to 600 kroner (approximately 75 to 90 USD), the financial benefit from the tax deduction could quickly be negated,” explains Ambrosius, who believes that the primary beneficiaries of this situation may be the tradespeople themselves.

For this reason, several economists argue that the tax deduction may not necessarily benefit the economy as a whole but rather serves as a political gesture towards homeowners. It is still unclear how the proposal will be implemented. The government has allocated 300 million kroner (about 45 million USD) for its introduction, but the exact parameters of the deduction have yet to be determined.

Ambrosius envisions that the tax deduction might be specifically targeted towards energy renovations and climate adaptation projects in homes, but the extent of each homeowner’s deduction remains uncertain.