Local GAAP now mandatory for Swedish property owners

The Swedish Accounting Standards Board (Bokföringsnämnden) has decided that, starting January 1, 2026, all real estate companies and tenant-owner associations (housing cooperatives) must prepare their financial statements in accordance with Swedish Local GAAP. This means that real estate companies and housing cooperatives can no longer apply the simplified Local GAAP framework (K2) but must instead follow the main Local GAAP standard in their annual reports.

What is Sweden’s Local GAAP?

Swedish Local GAAP is a national accounting framework that can be viewed as a simplified version of the international IFRS standards, which publicly listed companies are required to follow. In many areas, Local GAAP and IFRS are similar, but there are important differences when it comes to lease accounting.

Unlike companies applying IFRS 16, entities reporting under Local GAAP are not required to recognize operating leases as assets and liabilities on the balance sheet. Only finance leases are reported there, as they are essentially equivalent to installment purchases. In such cases, the company usually intends to retain the asset after the lease term, and the payments are therefore regarded as a form of financing.

Operating leases must still be disclosed under Local GAAP, but in less detail. Instead, they are presented in the notes to the annual report, where the company provides information about future lease payments. This gives readers insight into upcoming cash flows, even though neither the asset nor the liability appears directly on the balance sheet.
 

Operating Lease vs. Finance Lease – What’s the difference?

A finance lease means that the customer leases an asset for a fixed period with a predetermined residual value. When the lease term ends, the customer is required to designate a buyer for the residual value. For example, in car leasing, it is common for the vehicle to be traded in for a new one at a dealership, which in practice represents a sale that may result in either a gain or a loss.

Examples of finance lease arrangements for property owners include solar panels, charging stations, and similar components that are acquired through subscription-based agreements.

An operating lease, by contrast, differs in that the benefits and risks of ownership remain with the supplier or financing company. The customer pays a recurring fee for the right to use the asset but has no obligation to purchase it or arrange for a new buyer when the lease term expires.
 

What does component depreciation mean for housing cooperatives?

Under Swedish Local GAAP, housing cooperatives are required to apply component depreciation. This means that the building is divided into separate parts – for example, the roof, façade, plumbing systems, and elevators – with each component assigned its own depreciation period based on its estimated useful life.

This approach provides a more accurate and fair representation of the building’s financial position and reflects its economic value over time.

Leasify helps property owners and housing cooperatives with Local GAAP reporting

To make the process easier, Leasify is here to help. We provide a service that supports property owners and housing cooperatives with their Local GAAP reporting.

Since our founding in 2015, Leasify has established itself as a key player in lease accounting, particularly for large publicly listed companies and corporate groups. With the introduction of the IFRS 16 standard in 2019, we were among the first to launch a fully automated SaaS solution.

Today, around 500 companies, including 300 corporate groups, use our platform for their IFRS 16 and Local GAAP reporting. Through close collaboration with the leading audit firms, we continue to be a trusted partner in automated financial reporting.

Please don’t hesitate to contact us for more information about how we can support your organization.