Determining the fair market value of a gift
When you have received a gift, you must determine its fair market value, i.e. the probable selling price on the day the gift was given, in order to fill in a gift tax return. We assess the gift tax on the basis of this value.
Determining the fair market value
You can check the value of securities and fund units with a securities trader or bank, for example. If there is no trading price available for the day when the gift was given, use the price of the closest trading day.
You can donate only a whole real estate unit or share in a housing company or a fractional part of it (such as ¼). This means that you cannot donate a portion that would correspond to a certain amount of money (such as €4,999).
Please note that you cannot use the taxable value of a real estate unit as its fair market value, i.e. as the basis for gift taxation.
How to determine the value:
1. Use a valuation made by an expert (such as a real estate agent)
You can use for example a real estate agent's estimate of the fair market value of the real estate unit or apartment.
A real estate agent's or other expert's estimate is usually a good indication of the fair market value of the property.
2. Refer to similar transactions
If similar property has been sold recently, you can determine the value based on this (reference sale).
However, you can refer to reference sales if
- the piece of property sold is comparable in location and quality to the property you receive as a gift, and
- the reference sale and the donation happen close in time.
Recommended sources of reference sales include Asuntojen hintatiedot ("Prices of apartments", in Finnish and Swedish only) and websites where homes for sale are advertised.
3. When no reference sale or valuation statement is available
If no reference sale or valuation statement is available, see detailed guidance (available in Finnish and Swedish only).
Varojen arvostamisen yleiset periaatteet perintö- ja lahjaverotuksessa
Kiinteistö- ja asuntovarallisuuden arvostaminen perintö- ja lahjaverotuksessa
If the donation consists of a farm, forestry estate, or other property – such as a motor vehicle – see "How to valuate property" (detailed guide available in Finnish and Swedish).
Varojen arvostamisen yleiset periaatteet perintö- ja lahjaverotuksessa
Maatilan arvostaminen perintö- ja lahjaverotuksessa
Irtaimen omaisuuden arvostaminen perintö- ja lahjaverotuksessa
Frequently asked questions about the valuation of gifts
No, the taxable value is not the same as the fair market value.
The taxable value is a formal value confirmed by the Tax Administration for purposes of real estate taxation. Because taxable values are calculated on account of formal rules, they often result in values that are lower than the fair market value. For this reason, you usually cannot use the taxable value as the fair market value.
Example: The taxable value of a house is €20,079. Its fair market value, i.e. probable selling price, is €160,000. If the owner donates the house, the recipient must pay gift tax based on the fair market value, i.e. €160,000.
A housing company loan reduces the apartment's market value.
When you determine the fair market value of the apartment, you must take into account the apartment's share of the housing company loan. Deduct the remaining unpaid balance of the housing company loan on the date of gift from the value of the asset (e.g. from the likely selling price). However, you cannot deduct a loan taken out to buy or renovate the apartment.
Example: Antti gives his daughter Liisa an apartment. The apartment's share of the housing company loan is €20,000. This unpaid balance is transferred to Liisa's name. Based on reference sales, the apartment's fair market value is €150,000. The share of the housing company loan is deducted from the debt-free value, so the fair market value of the apartment is €130,000.
However, if Antti pays back the share of the housing company loan before the donation, the fair market value of the apartment used in gift taxation is €150,000.
Donors of a house, apartment or summer home may retain the right of possession even when they transfer the ownership to the gift recipient. This does not affect the fair market value of the gift but it changes the basis on which gift tax is assessed.
The Tax Administration calculates the value of the right of possession after you have submitted a gift tax return stating that the donor retains the right of possession to the gift. In this case, the basis of gift tax is the fair market value minus the value of the possession right.
Please note that the gift's period of ownership affects the taxation of capital gain.
If you sell assets you have received as a gift less than 1 year after the date of gift, the acquisition cost of the gift is considered to be same as the acquisition cost the donor could have used in their own taxation. In a case like this, the value confirmed in gift tax assessment can therefore not be used as the acquisition cost. This value can be used only if you have owned the assets you received as a gift for a minimum of 1 year.
More information is available in Finnish and Swedish in the Tax Administration's detailed guidance on the capital gains and losses on assets in a natural person's income taxation
No, the value of the gift cannot be 75% of the gift’s full value. If the transaction is actually a gift, involving no money (or other consideration) paid to the giver, the gift’s value is its fair market value in full.
Key terms: