The key things you need to know about Norway's BSU savings account
Norway offers specialised savings accounts with generous interest rates and a tax deduction for savers looking to get onto, or take their next steps, on the property ladder.
When planning for your future, many will tell you that a savings account is the way to go. In Norway, there are hundreds of different accounts on offer.
Of these, many will be straightforward savings accounts where the interest rate you receive will be balanced against the account's flexibility and how much you intend to save with the bank.
There are also options such as pensions, savings pots and accounts for your children or grandchildren.
READ ALSO: The key things you need to know about savings accounts in Norway
One of Norway's more unique accounts is the Boligsparing for Ungdom (BSU) account, which, as the Norwegian name would suggest, is a property saving account for young people.
These accounts offer healthy interest rates and are tax deductible. However, they come with a few conditions.
Who can have a BSU account?
For starters, you must be under 34, and the money must be used for property-related matters. This can be used for buying a home or paying down your mortgage. You don't need to be a first-time buyer, and you can set up the account after purchasing the home. However, the BSU account is no longer tax-deductible for homeowners.
You can deposit up to 27,500 kroner into a standard BSU account annually. You will receive a 10 percent tax deduction on the account's value.
Current interest rates on BSU accounts are between 5.3 and 6.2 percent. You can use the online comparison tool from the Norwegian Consumer Council to get an overview of the rates available to you for a BSU account.
Many banks also offer a BSU plus account. These come with a high-interest rate but no tax deduction. While you lose out on the tax-deductible, you can typically deposit twice as much per year. This allows people to build up a bigger pot faster and have access to the same high-interest rates.
The age limits and requirement to spend the money on housing still apply, though.
How does the tax deduction work?
As you can only deposit 27,500 kroner per year, you can only increase the deduction by 2,750 kroner yearly.
To receive the tax deduction, you must keep the money in the account for the rest of the year. If you withdraw the money in the same year it is deposited, you are no longer entitled to the deduction for that year.
BSU account holders can store up to 300,000 kroner in a BSU account. However, it would take 7-10 years to achieve this figure – so it will not apply to the majority.
Should you already own a home, you will not receive the tax deduction.
What can you use the BSU account for
Given the high equity requirements for securing a mortgage, many will earmark their BSU accounts as going towards a house deposit. Due to the limits on what can be deposited each year, many combine the BSU with an additional savings pot.
You can use funds in the BSU account to pay off interest and instalments of the mortgage. You can also use the BSU account to try and cover the mortgage's interest.
The money can also be used to cover the expenses related to the maintenance of the home too.
A new home under the BSU terms and conditions doesn't refer to a new build but any home purchased after setting up the account. This, for example, could mean the next property you buy if you already owned one when you set up the account.
The money can't be spent on new furnishings, however. Additionally, the money must be spent on a primary home and must be a traditional brick-and-mortar home. Houseboats and mobile homes are excluded from the scheme. The Norwegian Tax Administration has a full overview of what the BSU can be spent on.
Comments
See Also
When planning for your future, many will tell you that a savings account is the way to go. In Norway, there are hundreds of different accounts on offer.
Of these, many will be straightforward savings accounts where the interest rate you receive will be balanced against the account's flexibility and how much you intend to save with the bank.
There are also options such as pensions, savings pots and accounts for your children or grandchildren.
READ ALSO: The key things you need to know about savings accounts in Norway
One of Norway's more unique accounts is the Boligsparing for Ungdom (BSU) account, which, as the Norwegian name would suggest, is a property saving account for young people.
These accounts offer healthy interest rates and are tax deductible. However, they come with a few conditions.
Who can have a BSU account?
For starters, you must be under 34, and the money must be used for property-related matters. This can be used for buying a home or paying down your mortgage. You don't need to be a first-time buyer, and you can set up the account after purchasing the home. However, the BSU account is no longer tax-deductible for homeowners.
You can deposit up to 27,500 kroner into a standard BSU account annually. You will receive a 10 percent tax deduction on the account's value.
Current interest rates on BSU accounts are between 5.3 and 6.2 percent. You can use the online comparison tool from the Norwegian Consumer Council to get an overview of the rates available to you for a BSU account.
Many banks also offer a BSU plus account. These come with a high-interest rate but no tax deduction. While you lose out on the tax-deductible, you can typically deposit twice as much per year. This allows people to build up a bigger pot faster and have access to the same high-interest rates.
The age limits and requirement to spend the money on housing still apply, though.
How does the tax deduction work?
As you can only deposit 27,500 kroner per year, you can only increase the deduction by 2,750 kroner yearly.
To receive the tax deduction, you must keep the money in the account for the rest of the year. If you withdraw the money in the same year it is deposited, you are no longer entitled to the deduction for that year.
BSU account holders can store up to 300,000 kroner in a BSU account. However, it would take 7-10 years to achieve this figure – so it will not apply to the majority.
Should you already own a home, you will not receive the tax deduction.
What can you use the BSU account for
Given the high equity requirements for securing a mortgage, many will earmark their BSU accounts as going towards a house deposit. Due to the limits on what can be deposited each year, many combine the BSU with an additional savings pot.
You can use funds in the BSU account to pay off interest and instalments of the mortgage. You can also use the BSU account to try and cover the mortgage's interest.
The money can also be used to cover the expenses related to the maintenance of the home too.
A new home under the BSU terms and conditions doesn't refer to a new build but any home purchased after setting up the account. This, for example, could mean the next property you buy if you already owned one when you set up the account.
The money can't be spent on new furnishings, however. Additionally, the money must be spent on a primary home and must be a traditional brick-and-mortar home. Houseboats and mobile homes are excluded from the scheme. The Norwegian Tax Administration has a full overview of what the BSU can be spent on.
Join the conversation in our comments section below. Share your own views and experience and if you have a question or suggestion for our journalists then email us at [email protected].
Please keep comments civil, constructive and on topic – and make sure to read our terms of use before getting involved.
Please log in here to leave a comment.