 First-time Homebuyers' Exemption From Transfer Tax
Tax Deduction / Credit for Housing Loan Interest
Capital Gains on Property - Tax Exemption
Tax Deduction for Renovations & Repairs
Additional Information
Primary sources of information for this page: Finnish Tax Administration - Verohallinto & Finnish Ministry of Finance - Valtiovarainministeriö
This is a brief guide only, and does
not constitute legal advice
First-time Homebuyers' Exemption From Transfer Tax
The purchase of a first home for permanent use as a residence is exempt from transfer tax under certain conditions. In brief these are:
- The transferee must purchase at least a 50 percent holding in the house or apartment
- The transferee must be at least 18 but less than 40 years of age at the time the transfer deed is signed
- The transferee must use the property as a permanent place of residence, and start living in the newly acquired home without undue delay
See the Finnish Tax Administration's PDF First-time Homebuyers' Exemption from Transfer Tax for details of procedures, duties, conditions and restrictions.
Tax Deduction / Credit for Housing Loan Interest
Sources: Federation of Finnish Financial Services and Finnish Tax Administration
If you intend to pursue these tax advantages, please consult the Finnish Tax Administration for latest information
Tax Deduction
Paid interest on loans taken out to finance a house/apartment used as the permanent residence
of the taxpayer or family can be deducted in full from capital gains. If the
taxpayer has no capital gains or if the gains are not sufficient, an equivalent of 28% of the
amount of interest paid may be deducted from the amount of tax payable on earned income. First-time home buyers may deduct 30% of the amount of interest paid.
The maximum amount that
may be deducted from taxes is €1,400 for single persons and €2,800 for couples. Families with one child raises the ceiling by €400, two or more children raise the ceiling by €800.
Tax Credit
In the case where deductions from capital income are higher than the income itself (ex. a taxpayer pays high annual home-loan interest, but little or no capital income at all, a tax credit available. 28% (30% for first-time homebuyers) will be credited against the taxpayer's income taxes on earned income. This is called the 'Tax Credit for the Deficit in Capital Income'. The ceiling for this tax credit is €1,400 for single persons and €2,800 for couples. Families with one child raises the ceiling by €400, two or more children raise the ceiling by €800.
If the taxpayer does not have enough income from which to subtract the tax credit, it can be carried over to the following tax years. The taxpayer can thus receive the credit against future taxes on capital income. Losses relating to the capital-income category are deductible against capital income only. They can be carried forward to 10 upcoming tax years, and deducted against future capital income.
Capital Gains on Property - Tax Exemption
Capital gains in Finland are taxed at the flat rate of 28%. However, the gain from the sale of a taxpayer’s home (i.e. the 'profit'; the difference between the purchase and sale price) is exempt from capital gains tax if the taxpayer has owned and lived in the home for a continuous period of at least two years.
Tax Deduction for Renovations & Repairs
In short, 60% of the cost of services of tradesmen employed for "repair and fundamental improvement of dwellings" is tax-deductible, to an annual limit of 3,000 euros. The cost of the work must exceed 100 euros, and cannot be performed by the taxpayer himself or by a person living in the same household. The deduction excludes repair and installation of domestic appliances.
This deduction is also available for repair and improvement
of a second residence (ex. summer residence).
Please see pages 178-180 of the Finnish Ministry of Finance's PDF Taxation in Finland 2009 for detailed information.
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