If property is sold to someone for a price lower than the fair market value, i.e. the selling price is lower than the market value, the Tax Administration will consider it a gift.

If you buy an asset and the price you pay is no more than 75% (¾) of the fair market value, the transaction is a gift-like sale and you may have to pay gift tax. In gift-like sales, the value of the gift is the difference between the fair market value and the selling price.

Example: Antti sells his daughter Liisa an apartment for €130,000 but its fair market value is €200,000. The selling price is 65% of the fair market value (€130,000 / €200,000). From the perspective of gift taxation, Liisa is getting a gift worth €70,000 (fair market value €200,000 minus actual purchase price €130,000).

Gift tax on a gift worth €70,000 is €6,500 as she is in tax bracket 1.

If the selling price were higher than €150,000 (bringing it above 75% of market value), no gift tax would be imposed.

### How do I calculate the selling price in a gift-like sale?

The selling price or consideration includes all things of monetary value that the buyer gives to the seller in connection with the transaction.

• the amount that the buyer pays to the seller in cash
• any debts transferred to the seller
• benefits that the buyer agrees to give to the seller later, including life annuity or pension
• assets or property that the buyer gives to the seller (the consideration consists of the fair market value of such assets)
• other things at the buyer's responsibility, e.g. if the seller has the right of occupancy and the buyer pays for electricity and heating.

Example: seller's debts transferred to the buyer

Matti and Kati agreed about the following real estate deal: The property’s fair market value is €150,000. When Matti bought it, he borrowed money from the bank. Today, the remaining balance is €50,000. Kati agrees to pay back the loan to the bank, and the loan is transferred to Kati.

Because the loan is transferred to Kati in connection with the donation, Kati is considered to have paid Matti €50,000 as consideration for the gift. The remaining value of the gift is €100,000 (€150,000 – €50,000).

Gift tax on a gift worth €100,000 is €10,100 in 2023 for tax bracket 1 — and correspondingly €24,450 for bracket 2.

• a part of the donated property retained by the seller (such as a parcel of land not included in the sale)
• an apartment-specific share of an unpaid housing-company loan, which reduces the apartment's fair value
• a right of possession, occupancy or use that remains with the seller after the sale, provided that such a right does not require anything from the buyer (e.g. the right of occupancy does not include heating payable by the buyer)
• a right to take firewood or fell timber, retained by the seller.
Page last updated 1/1/2023