Buildings – how the taxable value is determined
You will receive a real estate tax decision every year. The decision includes a calculation of your real estate tax amount. The real estate tax is calculated as a percentage of the buildings’ taxable values. The taxable values are also stated in the real estate tax decision. They are values calculated for the purposes of real estate taxation based on the features of each building.
Taxable value is determined by the building’s features
The building type affects the building’s taxable value. Real estate taxation involves building types such as detached house, leisure property, utility building, garage and sauna.
The building type is usually determined according to the purpose for which the building permit was issued. The building type also depends on the building’s features. The purpose for which the building is used is therefore not the only aspect that determines the building type.
In real estate taxation, "area" refers to the total area of a building, such as a row house or a semi-detached house. The external dimensions of the building determine its total area. The areas of all floors, including cellars and thermally insulated attics, are included in the total area. The total area of the building is therefore usually greater than its floor area or the area used for living.
However, balconies, fixed-roof canopies or areas with a clearance of less than 160 cm are not included in the total area. Attics and porches are only included in the total area if they have thermal insulation.
The replacement value used as a basis for the taxable value is determined annually based on a decree issued by the Ministry of Finance. The decree states the values per square metre or cubic metre for each building type. These values depend on the building’s equipment and features. The building’s replacement value is calculated by multiplying the value according to the decree with the building’s area or volume. The location of the building has no effect on its taxable value. The calculation basis is the same everywhere in Finland.
The values stated in the decree are binding. The building’s actual selling price or construction cost does not usually affect its replacement value in taxation.
Calculation basis for buildings’ replacement values (Finlex) (in Finnish and Swedish, link to Finnish)
The building’s age affects its taxable value. The building’s taxable value is decreased every year according to a specific age depreciation rate. The age depreciation rate applied to the building depends on the building type and its load-bearing structure, as determined in the act on the valuation of assets for the purposes of taxation (Laki varojen arvostamisesta verotuksessa 1142/2005). For example, residential buildings, storage units and factories have different depreciation rates, and buildings whose load-bearing structure is made of wood have a different depreciation rate than buildings whose bearing structure is made of stone.
If the building has been considerably improved or renovated, the age depreciation rate is lower. Conversely, if the building has been damaged or exhibits more wear and tear than the standard age depreciation rate would indicate, the Tax Administration can decrease the building’s taxable value based on a separate account of the matter.
If the building is not completed, its taxable value depends on its percentage of completion, i.e. how far the construction has progressed. The taxable value of an unfinished construction is the corresponding percentage share of the completed building’s taxable value. For example, if the building is 80% complete, its taxable value is 80% of what its taxable value would be if it were complete.
Real estate tax is based on the taxable value
The amount of real estate tax is calculated by multiplying the building’s taxable value with the real estate tax rate that the municipality has determined for buildings.
The real estate tax rate depends on what purpose the building is actually used for. Sometimes the building can be used for several purposes: for example, one part is used for living and another as an office. In these cases, the applicable real estate tax rate is based on the primary use.
Read more about real estate tax rates
Example of calculating the taxable value and tax amount for a detached house
Details of the house: Detached house completed in 2000, area 150 m2. Building has electricity, water pipes, drainage and central heating. The bearing structure of the building is made of wood. The building is in permanent residential use.
The building’s taxable value for 2024 is calculated as follows: The value per square metre according to the Ministry of Finance’s decree is €686.85. The building’s replacement value is €103,027.50 (€686.85 x 150 m2).
The building’s age depreciation rate is 1.25 percentage points per year. Since the building is 24 years old in 2024, the age depreciation is 30% (1.25 x 24). The age depreciation therefore amounts to €30,908.25 (103,027.50 x 0.30).
The building’s taxable value is calculated by subtracting the age depreciation amount from the replacement value. The taxable value amounts to €72,119.25 (€103,027.50 – €30,908.25).
The amount of real estate tax payable on the building is calculated by multiplying the taxable value with the real estate tax rate of the municipality where the building is located. For example, if the tax rate is 0.45%, the tax amount is €324.54.