Capital transfer tax and its payment when buying a home
When you buy a real property, a share in a housing company or another security in Finland, you will have to pay capital transfer tax. The capital transfer tax is payable on your own initiative and is calculated on the basis of the purchase price or other consideration for the real property or share.
In this article, we explain how much capital transfer tax is, how to pay it and when you are exempt from paying capital transfer tax.
How much capital transfer tax do I have to pay?
The amount of the capital transfer tax is calculated on the basis of the purchase price or other consideration for the real property or share in a housing company. The corporate loan portion is also included.
Capital transfer tax for real property
The capital transfer tax on the transfer of real property and buildings is 4%. The tax rate on real property includes, for example, the plot and any buildings on it (e.g. detached house), the land area and any summer cottage on it, or the building or structure alone. Unseparated parcels and designated shares are also included in the tax rate on real property.
Capital transfer tax on shares in housing companies
The capital transfer tax on the transfer of shares in housing companies is 2%. Examples of housing shares are shares in blocks of flats or terraced houses. Business premises, parking place, warehouse or time share, for example, are also covered by the tax rate for real property.
Payment of capital transfer tax
The capital transfer tax must be paid on your own initiative and within a certain period of time.
In the case of real property and leasehold transactions, the tax must be paid at the latest at the time of applying for the legal confirmation of title or registration, and in any case at the latest within six months of the conclusion of the contract of transfer for consideration. For transactions in new residential apartments, the tax is payable within two months of the transfer of ownership. For transactions in second-hand residential apartments, the tax is payable within two months of the transaction or, if the transaction is carried out through an estate agent, immediately at the time of the transaction.
In the case of a real property transaction, the liability also applies to unpaid tax due on previous transfers. However, if the property is sold by forced sale, no tax is due on previous transfers. In the case of second-hand residential apartments, the real estate agent is obliged to ensure that the buyer pays the tax at the time of the transaction.
You can pay the tax to the Tax Administration in MyTax or via online banking. Each taxpayer pays their own share. For example, if a married couple buys a real property in half, they both pay their share of the tax separately. The capital transfer tax is paid at an accuracy of two decimal places.
If the tax is less than 10 € per buyer, no tax is payable. However, you should file a capital transfer tax return.
You can find detailed instructions on how to pay the tax on the Tax Administration’s website here.
When is the capital transfer tax not payable?
There are a couple of exceptions to the payment of capital transfer tax in real property and housing company share transactions. You do not have to pay capital transfer tax on your first home if certain conditions are met. There is also no transfer tax on a right-of-occupancy dwelling.
When buying your first home, you are exempt from capital transfer tax if:
- You acquire a real property and at least half of the building on it or to be built on it, or you acquire at least half of the shares entitling you to occupy a residential apartment.
- You use or will use the building or apartment as your own permanent home.
- You have not previously owned at least half of a residential building or of the shares entitling you to occupy an apartment.
- You are between 18 and 39 years old at the time of signing the deed of transfer.