The real estate tax is levied annually by the Finnish Tax Administration. Real estate tax is an ad valorem tax on the value of a property, which means that the amount of the tax is based on the value of the property. The tax rate is determined by the municipality where the property is located.
The value of a property is based on the value of the land and buildings and improvements made to them. No real estate tax is levied on property that is used for agriculture, forestry, or water areas.
THE valuation of property OF THE real estate TAX
The tax value of a building is defined based on its size, quality and equipment level, age, type, and percentage of completion. The persons, who are liable to pay real estate tax, receive annually the real estate tax decisions. Any renovations or other changes, which might affect the value of the building, such as adding access to water or the completion of a building, should be reported to the tax authority by completing the tax decision. All changes to the tax decision may be filed online via MyTax service.
The tax value of land is targeted to be 75 % of the fair market value. The tax rate depends on numerous factors such as the purpose of the use, permitted building volume, location, public transport connections, suitability for construction purposes, percentage of completion of municipal works and the price level.
Calculation and tax liability OF THE real estate TAX
The tax value is calculated by multiplying the tax rate with the tax value of the property, including both the land and the buildings on it. The tax value of a real estate cannot exceed the fair market value of the property
The person who owns the property at the beginning of each tax year is liable to pay the real estate tax. If a transaction takes place before the end of a tax year, the new owner of the real estate is also liable for the unpaid part of the tax for the current year. The Tax Authorities receive information of the real estate owners from the National Land Survey of Finland.
Calculation of taxable value of the real estate is not always simple. It is also not always simple to determine, how the details should be reported and how they should affect on the taxation of the real estate. Therefore, it would be recommended to ensure, whether the grounds for real estate taxation are correct even if there had not been any recent changes in ownership, using or condition of the land and buildings on it.