The Property Banks Buyers Guide to Finland
Finland is the seventh largest
country in Europe, covering 338,145 square kilometres and is the
second most northerly country in the world. It has long land
frontiers with Sweden, Norway and Russia. The climate is marked by
cold winters and warm summers but temperatures in winter are
moderated by the influence of the Baltic Sea and west winds from the
Atlantic warmed by the Gulf Stream. The mean annual temperature in
the capital, Helsinki, is 5.3 degrees Celsius. The highest daytime
temperature in southern Finland during the summer occasionally rises
close to 30 Celsius. During the winter months, particularly in
January and February, temperatures of minus 20 Celsius are not
uncommon.
In the far north, beyond the Arctic Circle, the sun does not set for
about 73 days, producing the white nights of summer. In the same
region, during the dark winter period, the sun remains below the
horizon for 51 days, creating the polar night known in Finnish as
kaamos.
Of the population, 93.4% speak Finnish as their native language,
whereas Swedish is the native language of 5.9% of the population.
Both Finnish and Swedish are official languages of Finland. English
is widely spoken but also German is quite commonly spoken,
particularly among the elderly people.
Capital gains tax on the sale of real estate situated in Finland are
taxed at 29%. The capital gain is calculated by subtracting the
acquisition cost from the disposal proceeds. Individuals and the
estates of deceased persons are allowed a minimum deduction of 20%.
If the property has been owned for more than ten years, the minimum
deduction is 50%. When selling real property that includes buildings
and/or structures, the sales price has to be broken down to reflect
which portion is attributable to the land and which portion is
attributable to the buildings/structures and the technical equipment
permanently affixed thereon. In principle, losses related to real
estate are tax deductible. If the real estate has not been used for
business purposes, the loss attributable to it may be offset against
any capital gains realised on the real estate during the current and
following 3 financial years.
Most restrictions on Foreign Ownership have been abolished.
Property and Real Estate Prices in Finland
Range Varies, for example:
From around £35,000 / $50,000 for a City Studio apartment
From around £55,000 / $80,000 for a City apartment
From around £65,000 / $90,000 for a small rural property
From around £100,000 / $145,000 for larger properties
Locations to buy property and real estate in Finland
The most popular locations in Finland are the major cities, the
capital Helsinki, with a population of 551,000, Tampere and Turku.
The Helsinki Metropolitan Area (HMA) in particular is becoming
increasingly popular, with property prices increasing due to the
strengthening growing trade markets with the Soviet Union. Lapland
situated in the northern half of the country is also a popular place
due to its extensive beautiful evergreen forests and for being
renowned as the home of Santa Clause, with many foreign visitors
staying each year.
Living Costs in Finland
The cost of living in Finland on average is comparable to the rest
of Europe. Basic necessities such as standard grocery foods are not
expensive and property is also priced averagely compared with the
rest of Europe. However, luxury imported items such, as cars can be
expensive due to taxation.
Buying Property and Real Estate in Finland
A solicitor/lawyer will correspond with the Real Estate Agent in
negotiation of the purchase price before the buyer and seller sign
the final document contracts. The solicitor/lawyer will notarise
them on your behalf and issue the official owner document.
Solicitor / Lawyer
It is advisable to use a solicitor/lawyer to check through the sale
agreement in Finland when buying real estate, run checks with the
local council, read survey reports and sign for completion of
contracts.
Fees
Transfer tax must be paid, at the latest, when applying for
registration of the deed and title to the acquired real estate. The
transfer tax rate is 4%. If the registration has not been applied
for, or such an application is unnecessary, the tax must be paid
within six months of concluding the transfer contract.
Property Tax
In Finland, there is a separate municipal tax on real estate. The
tax is payable by those who own the taxable property at the
beginning of the calendar year, even if they are non-resident
investors. The tax rate is based on the taxable value of each
individual estate. The general rate may vary between 0.3% and 1.0%.
For permanent residences, the tax rate may vary between 0.15% -
0.50%. Municipalities decide annually, within agreed limits, what
percentage will be used in their particular municipality.
Real estate tax is deductible, provided that the property has been
used for rental or business purposes. All property of the taxpayer
is subject to net wealth tax. However, a resident, Ltd Liability
Company is not liable to this net wealth tax. For resident
individuals the capital tax is levied at a rate of 0.9% of the
taxable net wealth exceeding FIM 1,100,000. As an exception to this
general rule, non-resident individuals are taxed on any net wealth
exceeding FIM 800,000.
Mortgages
Mortgage providers in Finland grant mortgage loans up to 75% of the
value of the property, usually with fixed rate option periods for
repayment. Payment terms are pretty flexible, the average being
around 20 years.