# Transfer tax in an exchange deal, distribution of matrimonial assets and distribution of estate

You may have to file and pay transfer tax not only when you buy property but also in other circumstances, such as an exchange of property, distribution of estate or exchanges of property related to a dissolution of marriage.

## Exchange deals are subject to transfer tax

If you exchange property subject to transfer tax for other such property, all parties to the exchange deal must pay transfer tax. For example, if you give your share in a housing company to someone else, and they give you another housing company share in exchange, both of you must file a transfer tax return and pay transfer tax.

You must file the transfer tax return for the property that you have received. The transfer tax rate is also determined by the property received. For example, shares in housing companies are subject to transfer tax at 1.5% and real estate units at 3%.

If a binding contract concerning the exchange deal was signed before 12 October 2023, the tax is 2% for shares in housing companies and 4% for real estate units. Check the transfer tax rates for different property types.

The amount of transfer tax is calculated from the fair market value of the property you gave in exchange.

Example: Seppo and Kirsi make an exchange deal in 2024. Seppo gives Kirsi a real estate unit worth €100,000 and Kirsi gives Seppo a share in a housing company worth €100,000 in exchange.

Seppo files a transfer tax return for the property he received. The transfer tax rate for housing company shares is 1.5%. The amount of transfer tax Seppo must pay is 1.5% of the fair market value of the real estate unit he gave to Kirsi in exchange for the apartment: 1.5% × €100,000 = €1,500.

Kirsi also files a transfer tax return for the real estate unit she received. The transfer tax rate for real estate is 3%. The amount of transfer tax Kirsi must pay is 3% of the fair market value of the housing company share she gave to Seppo in exchange for the real estate unit: 3% × €100,000 = €3,000.

### The amount of transfer tax is based on the fair market value of any assets handed over

Every party to the exchange deal must pay transfer tax on the fair market value of the asset/property they give away. Unless there is a contract of exchange that lists the values of all the items, the parties must provide a statement written up by a third party, such as a realtor or other party who can be considered independent, on the fair market values of the assets or property that are exchanged. The Tax Administration will perform a check to ensure that the “considerations”, i.e. the values listed in the contract, are in line with the actual fair market values as appropriate. This rule is followed also in cases where the contract of exchange contains values that deviate from market values.

If you pay a sum of money to your counterpart in addition to giving a physical asset to him or her, this must also be included in the consideration subject to transfer taxation. You have to pay transfer tax on the total, i.e. on the fair market value of the asset plus the money. The sum that the recipient gets is deducted from the value of the property that they transfer away.

Example: An exchange deal is made between Anja and Risto – Anja gives a housing-company flat to Risto; the flat’s debt-free price €100,000. Additionally, Anja pays Risto €50,000.

In exchange, Risto gives her a different housing-company flat — the debt-free price of that flat stands at €150,000.

Anja’s base for transfer taxation is €150,000 consisting of her flat (€100,000) and the sum of money (€50,000). This is the consideration she is paying out.

Risto’s base for his transfer tax is €100,000 (€150,000 minus the cash €50,000 from Anja).

### Housing-company loan is part of the consideration

If there is a balance of a loan taken by the housing company, allocated to the specific shares held by a shareholder, it is treated as part of the consideration. This means that both parties to such an exchange must file and pay transfer tax with the total debt-free prices of the received shares (the debt-free price is the total price that contains the loan balance as appropriate).

Example: Arja enters into an exchange contract, and she gives a housing-company flat to the counterpart — the debt-free price of that flat stands at €100,000. These shares are free of any loan balances relating to the housing company. Kirsi is the counterpart in this exchange contract. She gives Arja a housing-company flat, and the debt-free price of that flat stands at €150,000. This flat has €50,000 recorded in the accounting of the housing company as a loan balance allocated to it. The €50,000 is included in the debt-free price.

Arja must pay transfer tax on the debt-free price of the shares she acquired, i.e. on the €150,000. Kirsi must pay transfer tax on the debt-free price of the shares she acquired, i.e. on the €100,000.

### Exchanges with real estate

If you get a real estate unit as the result of an exchange, it is recommended that a written contract of exchange is made that contains the fair market values of the pieces of property being exchanged. Additionally, you must have a statement issued by the Tax Administration that confirms that the fair market value of the consideration is the same as the value set out by the written contract. You must show the statement to the National Land Survey when you ask for registration of the transfer of title.

You can submit a free-text request in MyTax or complete Form 6020e, Request for a statement for registration of title and other legal confirmation.

Make a check to see whether the conditions are fulfilled for an exemptible exchange of real estate units

## In the case of distribution of matrimonial assets, transfer tax may have to be paid

The practice is to divide, i.e. distribute, the shared property owned by a married couple if the marriage ends due to divorce or death.

There are two stages to a distribution of matrimonial assets:

1. Division of assets for purposes of tax calculation

The first step is to prepare inventories of both spouses’ assets (minus any debts) subject to matrimonial property rights.

2. Distribution

The second step is where all items of assets and debts are distributed to the two spouses. It may be that one spouse must make an adjusting payment to the other spouse. At this stage, the two spouses generally discuss the matter with each other in order to agree on any exchanges of the assets as necessary.

If the result of such a process is that you receive a real estate unit or securities – such as shares in a housing company – you must pay transfer tax on any part of the consideration that cannot be included in the assets under the distribution of matrimonial property. A frequently occurring situation is that one of the spouses has borrowed money from a bank after the divorce has been pending. The typical purpose of such a loan is to finance the purchase of the other spouse’s half of the married couple’s former home. Because the bank loan is received after divorce, it is not subjectible to the distribution of matrimonial property: transfer tax must be paid on the part of the home paid for with the borrowed money.

However, if no real estate units or securities change hands in the distribution process, no transfer taxation will be involved. Neither one of the former spouses must pay transfer tax. For example, if the other spouse wants to continue owning the part he or she already owns, it does not give rise to transfer taxation.

For more information and examples, see the detailed guidance (in Finnish and Swedish, link to Finnish) with information on division between spouses who have had a prenuptial agreement during their marriage.

## Property received in distribution of estate may also be subject to transfer tax

When the property you receive is strictly inheritance, you do not have to pay transfer tax or file a transfer tax return. The property is strictly inheritance when the deceased person’s property is distributed such that a beneficiary does not pay any consideration to other beneficiaries using funds that do not belong to the estate, i.e. their own savings or the like.

Example: Pirkko died unmarried and without children, and she did not leave a will. Pirkko’s heirs are her siblings Markku and Kerttu. Pirkko’s estate includes a share in a housing company (€200,000), stocks (€150,000) and cash (€50,000).

The estate in total is worth €400,000. For purposes of calculation, both Markku’s and Kerttu’s portion of inheritance is half of the total estate, i.e. €200,000.

According to the agreement on distribution of estate, Markku receives the stocks and cash, whereas Kerttu receives the share in a housing company. Each heir’s portion of Pirkko’s estate corresponds to the portion of inheritance for purposes of calculation, so there is no need to adjust the portions using external funds. The property Markku and Kerttu receive is strictly inheritance, so they do not have to pay transfer tax or file a transfer tax return.

## When is transfer tax collected in the case of distribution of estate?

When an estate is distributed, property may be transferred partly as inheritance and partly against consideration. A typical situation is if the property you receive is worth more than your portion of inheritance and you therefore pay consideration to one or more heirs using your own savings, for example, or a bank loan – i.e. funds that do not belong to the deceased person’s estate. In such a case, you must pay transfer tax and file a transfer tax return on the portion of the stocks or real estate for which you pay consideration using funds that do not belong to the estate.

Example: Eino died without leaving a will. Eino and his widowed spouse Eila had a prenuptial agreement, according to which they do not have marital rights to each other’s property. The only parties to the estate are therefore their joint children Elina and Elias.

Eino’s estate includes a real estate unit with a summer cottage (€160,000) and a camper van (€40,000). The estate is worth €200,000 in total. For purposes of calculation, each heir’s portion of inheritance is half of the total estate, i.e. €100,000.

Elina is not interested in the summer cottage and she does not have a driving licence, either. In the agreement on distribution of estate, the heirs agree that the real estate unit and the camper van go to Elias and that Elias pays Elina €100,000 in consideration, using a bank loan he takes out for the purpose.

The property Elias receives is partly inheritance. In addition, he pays Elina €100,000 in consideration for part of the property, using assets that do not belong to the estate. The €100,000 is allocated for the real estate unit and the camper van in proportion to their values: €80,000 for the real estate unit and €20,000 for the camper van.

The camper van is not subject to transfer tax. Elias must file a transfer tax return on the real estate unit. He must pay 3% in transfer tax on the part of consideration allocated for the real estate unit (€80,000). The amount of transfer tax is €2,400.