Based on ETCB’s risk analysis, real estate sales data has been pre-filled in the income tax returns of 2084 people in 2024 and the total sales transactions exceed 137 million euros in value. According to Aune Maria Marjapuu, the leading specialist of the income tax department of the ETCB, these people have to add data on the acquisition cost and expenses directly related to the sale to their income tax return. “Gains from the sale of real estate are subject to income tax. If the sale was exempt from tax, i.e. a place of residence, summer cottage or land returned in the course of ownership reform was sold, the pre-filled data may be deleted from the income tax return. It is important to add a reason for this before deleting the data,” Marjapuu said.
The sale of real estate subject to taxation the data of which is not pre-filled in the income tax return must be declared in table 6.3. Sales of real estate exempt from tax must not be declared.
Income from rent must be declared in the income tax return of a natural person by indicating the total amount of rent earned during the year. “Expenses incurred by the tenant in connection with the maintenance of an apartment or residential building – for example, if the tenant has paid for snow removal instead of the landlord or replaced furniture or electronics – are not included in the income from rent. However, if the tenant pays loan payments or land tax on behalf of the landlord of the apartment, these are included in the landlord’s income from rent,” Marjapuu added.
If real estate or e.g. arable land has been rented to a company, the company has already withheld income tax when making a payment. This data is pre-filled in the first part of table 5.4 of the income tax return.
If income tax has not been withheld from income from rent, the amount received during the year and the address of the real estate must be entered in the second part of table 5.4 of the income tax return.
When renting out a dwelling, 20% can be deducted from income to cover the expenses related to the rental. Such costs include, for example, the maintenance of the apartment or minor repairs. There is no need to submit separate expense receipts for the deduction of these expenses, the deduction of 20% is made automatically upon declaration of income from rent. Income tax of 20% is payable on the amount of rent, reduced by 20% of the deductions allowed. If income from renting out a dwelling is pre-filled in the income tax return, the calculation of the tax incentive is automatic. An example on this can also be found on the ETCB website.
Income from the provision of accommodation services through platforms on which the payer has not withheld income tax is also income from rent. If a private person provides accommodation services through, for example, AirBnb or Booking.com and does not do so as an economic operator, then this income must also be included in the income tax return of the natural person. Utilities related to the use of the apartment may not be deducted from the income earned from the accommodation service. It is correct to declare the income received from the provision of accommodation services in the second part of table 5.4 as the 20 % deduction is not allowed. In order to take the expenses related to the apartment into account upon the provision of accommodation services, it is necessary to offer the service as an economic operator.
The ETCB verifies the declaration of rental income earned through platforms on the basis of the data platform operators submit to the ETCB. “Since 2023, platform operators have been obliged to provide the ETCB with information about the sellers and service providers operating on platforms and the income earned by them, to which an Estonian private person or company has been a party,” Marjapuu explained.
If, after submitting an income tax return, it becomes evident that a person has failed to declare part of his or her income, the ETCB asks for the tax return to be corrected. “In the event that a declaration is not corrected, we can, in the course of supervision, determine the amount due and add an interest. We prefer not to go down this path, which is why we ask you to carefully enter all the income earned last year in the income tax return," said Marjapuu.
If you have sold or rented out real estate and are unsure about the amount to be declared, the ETCB recommends that you read the information on our website. If you do not find answers to your questions on our website, contact the ETCB.
