Based on the ETCB’s analysis, the 2025 real estate sales data has been pre-filled in the income tax returns of 1,173 persons, and the total value of the sales transactions exceeds 112 million euros. When completing their income tax returns, these individuals must also include the acquisition cost and expenses directly related to the sale.
Aune Maria Marjapuu, leading specialist at the ETCB’s Income Tax Department, notes that the sale of real estate is tax-exempt if it has been used as a place of residence and no more than one such sale has taken place within a two-year period. "The sale of real estate is exempt from tax, for example, if a residence, summer cottage, or land returned during the ownership reform is sold. In such cases, the pre-filled line on the income tax return can be deleted, adding the reason. In all other cases, income tax must be paid on the gains from the sale of real estate," said Marjapuu.
Real estate sales, the gains from which are taxable but the details of which are not pre-filled in the income tax return, must be declared in Table 6.3.
Income from rent must also be included in the income tax return, indicating the total amount of rent earned during the year. “However, rental income does not include the tenant's expenses related to the maintenance of an apartment or dwelling. These are expenses that the tenant has incurred on behalf of the landlord – for example, expenses for snow removal, but also for replacing worn-out furniture or electronics in the rental space. However, if the tenant pays loan payments or land tax on behalf of the landlord, these are considered part of the landlord's income from rent,” Marjapuu explained.
If real estate or, for example, arable land has been rented to a company, the company will have already withheld income tax when making the 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% of the rental income may be deducted to cover expenses related to the rental. Such costs include, for example, the maintenance of the apartment or minor repairs. No separate expense documents need to be submitted to deduct these expenses; a 20% deduction is automatically made when declaring income from rent. Income tax of 22% must be paid on the rent amount, which may be reduced by deductions. If income from renting out a dwelling is pre-filled on the income tax return, the calculation of the tax incentive is also automatic. An example on this can 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 a natural person. “Utilities related to the use of an apartment may not be deducted from the income earned from the accommodation service. Income earned from providing accommodation services should be declared in the second part of Table 5.4 under the category "other income from lease and rent (immovable property, movable)", as no 20% deduction is allowed from this. 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,” Marjapuu explained.
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 required to provide the ETCB with information on transactions carried out on their platforms by Estonian individuals or companies. Information on the income earned through these platforms is also submitted to the ETCB. The ETCB compares this data with the information provided in the income tax return.
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 tax return 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.
In January this year, the ETCB contacted nearly 200 people who had failed to declare real estate sales last year. Subsequently, an additional €4.2 million in income was declared, resulting in a total tax liability increase of €294,000. As a result of all ETCB follow-up activities related to real estate income, an additional €16.2 million in income was declared last year, which increased the tax liability by over €2.2 million.
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 to avoid any mistakes.
