Selling residential property
You may sell your permanent home exempt from tax, provided that both of the following conditions are met:
- You have owned the house or apartment for at least 2 years.
- You have or one of your family members has permanently lived in the house or apartment continuously for at least two years while you have owned the property. Family members include the spouse and children under 18.
In other cases, capital gain for the residential property, in other words any profit you make on the sale, is taxable as capital income. If you sell the residential property at a loss, the loss is deductible primarily from the capital gains of the tax year in question.
Even if you do not pay taxes on the sale of your residential property, you must ensure that the information regarding the sale is included in your pre-completed tax return.
When you receive the pre-completed tax return, check the information in it. If the information on the sale of the residential property is not in the tax return, file the missing details either in MyTax or on Form 9.
When reporting your sale, please note:
- You are not allowed to divide your gain or profit over two tax years if the sale was a single transaction. Capital gains for selling residential property are taxed as income for the year of the sale. The time of receiving the selling price is irrelevant to the time of taxation.
- If you did not receive the property in a single transaction at the time when you got it – it may be that you inherited it in two consecutive parts, or bought a certain percentage of it first, and the rest later – you must report the sale in two parts as well.
The decision and bank forms will be sent to MyTax and by post to your home address.
You can request prepayments up until the date when the Tax Administration finishes your tax assessment for the year. To avoid any penalty charges for late payment, you should make sure that your request arrives at the Tax Administration before the end of the calendar year when you sold the property.
Check the pre-completed tax return and if needed, correct the information in MyTax.
The profit for selling the residential property is taxed as capital income for the year of the sale. The time of receiving the selling price is irrelevant to the time of taxation.
Sales can generate profit or loss
When you sell a residential property, you usually gain a sales profit, i.e. a capital gain, or incur a sales loss, i.e. a capital loss. When calculating the amount of profit or loss, deduct the following from the selling price of the residential property
the purchase price you paid for the residential property and any possible transfer tax
the expenses incurred in making a profit, such as brokerage and handling fees.
If you received the residential property as a gift or inheritance, you can deduct its taxable value, which was confirmed by the Tax Administration for the purpose of gift or inheritance taxes. Read more about calculating capital gains and losses in the detailed guidance Taxes on transfers of securities, section 4 “Calculating capital gains and capital losses" (available in Finnish and Swedish, link to Finnish).
The deemed acquisition cost can be deducted instead of the purchase price and expenses
When calculating the amount of profit or loss, you can deduct the deemed acquisition cost from the selling price, instead of deducting the purchase price of the residential property and the expenses related to the sale, or instead of deducting the taxable value given in a decision on inheritance tax or gift tax.
- If you have owned the residential property you are selling for less than 10 years, the deemed acquisition cost is 20% of the selling price of the residential property.
- If you have owned the residential property you are selling for at least 10 years, the deemed acquisition cost is 40% of the selling price.
Read more about the deemed acquisition cost in the detailed guidance Taxes on transfers of securities, section 4.2.2 "The deemed acquisition cost and holding time" (available in Finnish and Swedish, link to Finnish).
Please note that if you apply the deemed acquisition cost to your calculation, you cannot deduct the purchase price of the residential property and the expenses incurred in making a profit from the selling price.
You have two options:
either the purchase price + expenses incurred in making a profit (or the taxable value), or the deemed acquisition cost.
If you made a loss on the sale of a residential property, do as follows:
- The Tax Administration will contact you to ask for further information. You will receive a request by post for further information on the capital gain.
- Check and if needed, correct the information in the request you received.
- Check the information in the tax return in the spring.
How to deduct loss
Losses from selling residential property can be deducted from both capital gains and other capital income. Capital losses cannot be deducted from earned income.
If you have no capital income in the year of the sale, or the capital income is less than the loss to be deducted, the Tax Administration will deduct the capital loss from the capital income over the next five years.
The capital loss arises in the year in which a binding sale or other agreement was concluded.
The loss for selling your own permanent home is not tax-deductible if the profit for selling the same residential property would have been exempt from tax.
The tax rate for capital income applies to tax paid on capital gains
The seller of the property pays tax on the capital gain according to the capital income tax rate.
|Up to €30,000||30 %|
|The part exceeding €30,000||34 %|