Introduced in 1993, the real estate tax replaced the land tax, the street charge, the tax on income from housing, and presumptive income taxation.
Both land and buildings are subject to real estate tax. In addition to waters, land used for agriculture or forestry is exempt from real estate tax, whereas buildings located on the land are subject to real estate tax. Real estate tax is deductible from income taxation providing the real estate has been used for earning income.
The proprietor of the real estate is subject to real estate tax. Municipalities are not liable to pay real estate tax on real estate located on municipal land.
The Level of Tax
The real estate tax is based on the taxable value of the real estate determined by the real estate tax rate. The taxable value of the real estate is defined in the act on the valuation of assets in taxation (1142/2005) and in accordance with the basis of calculations applied the previous year.
Municipal councils are responsible for determining their respective real estate tax rates within a range defined by law. There are two categories of real estate tax rates defined in tax legislation: the general real estate tax rate for land and buildings other than permanent residential buildings and the real estate tax rate for permanent residential buildings. Municipalities can also set real estate tax rates on power stations, vacant constructions sites, and non-permanent residential buildings which consist primarily of leisure homes.
In 2008, the ranges within which real estate tax rates must be set are as follows:
The general real estate tax rate must be set between 0.50 % and 1.00 %.
The real estate tax rate for permanent residential buildings must be set between 0.22% and 0.50%.
The real estate tax rate for other residential buildings must not be more than 0.60 percentage points above the tax rate of primarily permanent residential buildings.
The real estate tax rate for power stations must not exceed 2.50%.
The real estate tax rate for vacant construction sites must be set between 1.00% and 3.00%.
In certain municipalities in the metropolitan area, the real estate tax rate for vacant construction sites must be set at least 1.00 percentage point above the general real estate tax rate. However, the real estate tax rate for vacant construction sites must not be set above 3.00%.
The real estate tax rate for buildings and land that are property of a non-profit association can be set lower than defined above, providing the building is primarily used for the public good, in which case the real estate tax rate may be set at 0.00%.
Ministry of Finance P.O BOX 28 FIN-00023 GOVERNMENT Tel. +358 9 160 01 E-mail: valtiovarainministerio@vm.fi