How is the tax calculated?
Rental income is considered capital income and taxed according to your tax rate for capital income.
| Up to EUR 30,000 | 30% |
|---|---|
| Over EUR 30,000 | 34% |
The tax is based on your net amount of rental income. You can calculate your net rental income by deducting the expenses related to rental operations from your gross rental income. Most common expenses include
- maintenance charges
- capital charges that are recorded as revenue in the housing company’s books
- expenses related to renting (newspaper ads, agent’s fees, etc.)
Example: Mary is the landlord of an apartment in Espoo. She receives €750 of rent for the apartment every month for the entire year. Her gross rental income for the year is therefore €750 × 12 months = €9,000/year.
From this gross amount, Mary can deduct €180 of maintenance charges and €140 of capital charges for every month. Capital charges are recorded as revenue in the housing company’s books and they can therefore be deducted from the rental income in their entirety. In addition, the tenant pays €19/month for water. Mary transfers these payments to the housing company.
Mary’s yearly rental income from the apartment is €9,000 (12 × €750) + €228 for water (12 × €19) = €9,228. From this amount, she can deduct €2,160 of maintenance charges (12 × €180) + €1,680 of capital charges (12 × €140) + €228 of water charges (12 × €19) = €4,068.
Her net rental income is therefore €9,228 - €4,068 = €5,160.
Since Mary has no other capital income, her tax rate is 30%. She will therefore have to pay €5,160 × 0.30 = €1,548 in taxes.