# Subletting in the Third Hand: Rules and Tax Implications *29 juni 2026* > Subletting in the third hand can be a solution for housing needs, but it's crucial to understand the rules and tax implications. Read our guide to avoid pitfalls. Considering subletting in the third hand can be an attractive solution for both those needing temporary housing and those looking to earn extra income from their rental property. However, before signing a third-hand contract, it's crucial to understand the complex rules and potential tax implications surrounding this type of rental. Subletting in the third hand, meaning renting out a property you yourself rent, requires careful consideration and knowledge of current legislation to avoid problems. ## What Does Subletting in the Third Hand Mean? Subletting in the third hand occurs when a person (the original tenant) rents out their dwelling to another person (the second-hand tenant), who in turn rents it out to a third person (the third-hand tenant). This situation often arises when the original tenant needs to leave their dwelling for a period but wishes to retain it, or when there's a need to find housing quickly, leading to a chain of rentals. It's important to distinguish this from second-hand subletting, where the original tenant rents their dwelling directly to a new tenant. ## Rules for Subletting in the Third Hand Subletting in the third hand is not permitted without permission from both the original landlord and, in some cases, the housing cooperative if it's a right-of-residence (bostadsrätt). The rules differ depending on the type of tenancy: ### Right-of-Residence (Bostadsrätt) If you own a right-of-residence and wish to sublet it in the second hand, which could subsequently lead to a third-hand sublet, permission from your housing cooperative is required. The cooperative has the right to deny if they have reasons to believe the sublet will not be managed correctly. If you, as the holder of the right-of-residence, sublet your dwelling in the second hand, and your second-hand tenant then sublets it in the third hand without permission, you are both violating the rules. This could lead to you, the right-of-residence holder, risking the loss of your right-of-residence. ### Rental Right (Hyresrätt) Similar principles apply to a rental right. To sublet your rental right in the second hand, permission from your landlord is required. If you then sublet in the third hand, permission for that third-hand sublet is also needed, which practically means both your original landlord and your direct sub-landlord must give their consent. Subletting in the third hand without these permissions can lead to your termination as the original tenant. ## Important Aspects to Consider for Third-Hand Contracts A third-hand contract is an agreement between the person subletting in the second hand and the person renting in the third hand. It is of utmost importance that this contract is clear and legally sound. The contract should specify: * **Rental Period:** Clear start and end dates. * **Rent:** The amount the third-hand tenant must pay. It's important to note that the rent cannot be higher than what the second-hand tenant pays their original landlord, plus reasonable compensation for furniture and operating costs if the dwelling is furnished. * **Furnishings:** Whether the dwelling is furnished and what is included. * **Rules and Responsibilities:** Which rules apply in the building and what responsibilities the third-hand tenant has. Using standardized templates for third-hand contracts can be beneficial, but ensure they are adapted to your specific situation and current legislation. ## Tax Implications of Subletting in the Third Hand When you sublet a dwelling, whether in the second or third hand, tax implications can arise. To avoid unpleasant surprises during tax filing, it's important to be aware of the rules for tax on subletting in the third hand. ### Income Tax If you sublet a furnished dwelling in the second hand and charge a rent that exceeds your actual costs (including capital costs, operating costs, and potential maintenance), the surplus may be taxed as capital income. For furnished dwellings, there's a standard deduction. For unfurnished dwellings, the deduction is SEK 10,000 per year. For mortgaged dwellings, the deduction is SEK 40,000 plus 20% of the rent exceeding SEK 40,000. It's crucial to keep track of all your expenses related to the sublet to make correct deductions. If you sublet in the third hand and charge a higher rent than you yourself pay, the difference, after deductions, may be taxable. ### VAT In most cases, subletting dwellings is VAT-exempt. However, exceptions may apply, especially if the sublet is for commercial purposes and not considered private rental. It's uncommon for private individuals subletting in the third hand to become liable for VAT, but it's good to be aware of. ## Potential Pitfalls and Risks Subletting in the third hand involves several risks that both the sub-landlord and tenant should be aware of: * **Unauthorized Subletting:** As mentioned, this can lead to termination and loss of the dwelling. * **Tenant's Responsibility:** If the third-hand tenant causes damage to the dwelling, the second-hand tenant might be liable to the original landlord or housing cooperative. * **Tax Evasion:** Failing to declare income from subletting can lead to tax surcharges and, in the worst case, prosecution for tax offenses. * **Problems with the Second-Hand Tenant:** If the second-hand tenant fails to pay their rent to the original landlord, it can have serious consequences for the original tenant. ## FAQ ### Do I need permission to sublet in the third hand? Yes, absolutely. You must have permission from both your original landlord (or housing cooperative) and the person you are renting from (your direct sub-landlord). Without these permissions, the sublet is illegal. ### Can I charge a higher rent in the third hand than I pay myself? You can charge a rent equivalent to what you pay yourself, plus reasonable compensation for furniture and operating costs if the dwelling is furnished. If you charge a significantly higher rent, the surplus may be taxable. ### What happens if my third-hand tenant doesn't pay the rent? If the third-hand tenant fails to pay you their rent, and you consequently cannot pay your landlord, it could lead to your termination. You may also need to take legal action to recover the payment. ### Is it common to sublet in the third hand? No, it's not very common and is often complicated due to the multiple permissions required. It's more common to sublet in the second hand. Many landlords and housing cooperatives are restrictive about allowing third-hand sublets. ### What are the biggest risks of subletting in the third hand? The biggest risks include losing your dwelling due to unauthorized subletting, facing financial consequences from unpaid rent or damages, and incurring tax surcharges for undeclared income.