Transfer of immovable property

When selling or exchanging land, house or apartment, the question arises – whether income tax is payable on the gains received. If so, how and when to declare the gains and how the tax amount is calculated. You can find answers to these questions in the following guide.

Handbook

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Calculation of taxable gains at sale of property

Formula for calculating taxable gains derived from sale of property 
sales price – acquisition cost – costs directly related to sale = gains taxable with income tax

EXAMPLE
A person bought an apartment for 625,864 Estonian kroons (acquisition cost) and sells it for 60,000 euros (sales price).
The apartment was not used as the person’s actual place of residence. The expenses directly related to the sale (property valuation, costs related to the sales contract, etc.) were 3,000 euros, which can be deducted from the income.

When declaring income, the acquisition cost must be converted into euros: 625,864 ÷ 15.6466 = 40,000.
The gain from the sale of the apartment subject to income tax is calculated as follows: 60,000 – 40,000 – 3,000 = 17,000 euros
The income tax rate is 20%.
The income tax amount is calculated as follows: 17,000 x 0.20 = 3,400 euros.

Last updated: 26.10.2023

Tax-exempt or taxable transaction

This table provides a quick overview of real estate transactions that are exempt from tax when certain conditions are met. For more information about the transaction you are interested in, please view the handbook.

Object of the contract of purchase and sale
Basis of tax exemption
in the income tax act
To the subject of ownership reform /
a privatiser with the right of pre-emption /
the owner
To a successor
To a legatee
By gift or other transfer transaction
Property returned in the course of the ownership reform § 15 (4) 5) sale is exempt from tax the tax exemption is passed on the tax exemption is not passed on, gains are taxed the tax exemption is not passed on, gains are taxed
Immovable property obtained by restitution after being unlawfully expropriated and the essential part of which is a dwelling § 15 (5) 2) sale is exempt from tax


the tax exemption is passed on 

 the tax exemption is not passed on, gains are taxed the tax exemption is not passed on, gains are taxed
Immovable property privatised with the right of pre-emption and the essential part of which is a dwelling

§ 15 (5) 3)

The dwelling together with land belonging to it has been privatised with the right of pre-emption and the size of the registered immovable property does not exceed 2 hectares.

 sale is exempt from tax the tax exemption is not passed on, gains are taxed the tax exemption is not passed on, gains are taxed the tax exemption is not passed on, gains are taxed

Summer cottage or garden house

§ 15 (5) 4)

According to the register of construction works or the land register, the summer cottage or garden house has been in the person’s ownership for more than two years and the size of the registered immovable does not exceed 0.25 hectares.

 sale is exempt from tax the tax exemption is not passed on, gains are taxed the tax exemption is not passed on, if conditions are met, then sale is exempt from tax the tax exemption is not passed on, if conditions are met, then sale is exempt from tax

This table provides a quick overview of real estate transactions that are taxable (including, under certain conditions or in the absence of the required condition, taxable).

Object of the contract of purchase and sale
Basis for taxation in the Income Tax Act
Calculation of gains or loss
Garage § 15 (1)

§ 37 (1)

the difference between the acquisition cost and the sales price of the sold property
Land (agricultural or forest land) § 15 (1)

§ 37 (1)

the difference between the acquisition cost and the sales price of the sold property
Real estate

§ 15 (1)

Is not the residence and/or has sold the residence in less than two years.

§ 37 (1)

the difference between the acquisition cost and the sales price of the sold property
Immovable property privatised with the right of pre-emption and the essential part of which is a dwelling

§ 15 (1)

There is no dwelling and/or land belonging to it has not been privatised with a right of pre-emption and/or the size of the registered immovable exceeds 2 hectares.

§ 37 (1)

the difference between the acquisition cost and the sales price of the sold property
Storage space

§ 15 (1)

Selling in a separate transaction from dwelling.

§ 37 (1)

the difference between the acquisition cost and the sales price of the sold property
Parking spot

§ 15 (1)

Selling in a separate transaction from dwelling.

§ 37 (1)

the difference between the acquisition cost and the sales price of the sold property
Summer cottage or garden house

§ 15 (1)

Not entered in the register of construction works or the land register, the summer cottage or garden house and/or owned by a person for less than 2 years and/or the size of the registered immovable exceeds 0.25 hectares.

§ 37 (1)

the difference between the acquisition cost and the sales price of the sold property
private client

Last updated: 13.07.2023

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