Rental yield and taxation of an investment flat 2026

Rental income is capital income

Rental income is taxed as capital income. Tax is paid at 30% of capital income up to €30,000 and at 34% on the portion above that. The limit applies to all capital income together, so rental income, dividends and capital gains are added together.

Tax is not paid on gross rent but on net income, from which the costs of the rental activity have been deducted. In the Finnish Tax Administration's example, rental income is 9 228 euros a year and deductions 4 068 euros, so the taxable income is 5 160 euros and the tax at 30 % is 1 548 euros.

What expenses can be deducted?

Deductible are expenses arising from earning rental income. Living expenses cannot be deducted. The most common deductions for a shares-based apartment are:

maintenance charge and the housing company's income-recognised capital charge (see below)
annual repairs, deducted in the year of payment
advertising and brokerage costs for finding a tenant
interest on a loan taken to acquire a rental dwelling, deducted in full from capital income
major improvements, such as larger renovations belonging to the shareholder, which on request can be depreciated on a straight-line basis over up to 10 years

Financing charge: booked as income or placed in a fund

Whether a financing charge (capital charge) is deductible depends on how the housing company books it. If the company records the charge as income, the landlord can deduct it in the year it is paid. If it is placed in a fund, it cannot be deducted from rental income; instead it is added to the acquisition cost of the shares and taken into account only when the home is sold.

Check the practice with the housing company's property manager or in the financial statements. The same applies to charges paid during the renovation of an apartment: they are deductible only if the apartment is in rental use at the same time.

Furnished apartment and household appliances

If you rent out a furnished home and do not have documentation of actual expenses, you can make a flat-rate furnishing deduction: up to €40 per month for a studio or single room and €60 per month for a two-room or larger apartment. The deduction does not depend on the number of tenants.

If you can demonstrate the actual expenses, you can deduct them in full. Furniture and household appliances are deducted in the year of acquisition if the undepreciated acquisition cost is under €1,200. Otherwise they are depreciated using a declining-balance method at up to 25% per year. Fixed household appliances, such as a fridge, cooker and dishwasher, can be deducted in addition to the furnishing deduction.

When expenses exceed income

If capital income is not enough to cover the deduction of interest, a deficit in the capital income category arises. Of this, 30% is deducted as a deficit credit from the tax on earned income. The credit is subject to maximum amounts, which should be checked in the Finnish Tax Administration's guidance. Interest on a loan for an owner-occupied home has not been deductible since the 2023 tax year, but interest on a loan for a rental home remains deductible.

A property owner can make depreciation deductions on a building: at most 4% a year for a residential building and at most 7% a year for, for example, a warehouse or shop. The owner of a share-based flat does not make building depreciation deductions.

Calculating rental yield

Gross rental yield is calculated by dividing a year's rental income by the home's debt-free purchase price. In net rental yield, costs such as the maintenance charge, repairs, vacant months and other expenses are first deducted from the rental income. Net yield better shows what the investor actually keeps, and the after-tax yield is obtained by deducting capital income tax from the net income.

In calculations it is worth using the area's realised rents rather than asking prices. Rental Radar shows Statistics Finland's rents per square metre by city, so you can compare your own home's rent with the area average. The guide is not investment advice.

Reporting and paying the tax

All rental income and the related expenses must be reported for taxation, even if the income is small. Income for the current year can be reported in OmaVero as it accumulates, and the information is transferred to the pre-completed tax return the following spring. On paper, rental income from a share-based apartment is reported on form 7H. Income received through rental platforms must also be reported, as the Finnish Tax Administration (Verohallinto) receives information about it. If you own the apartment jointly with someone else, report only your own share of the income and expenses.

Tax on rental income can be paid already in the income year, either by raising the percentage on your salary tax card or by applying for advance tax, which is paid in 2–12 instalments. This avoids residual tax. Receipts must be kept for six years after the end of the tax year.

Frequently asked questions

How much tax is paid on rental income?

Capital income tax of 30% is paid on net rental income up to €30,000 and 34% on the portion above that.

Can the financing charge be deducted from rental income?

Only if the housing company recognises it as income. A capitalised financing charge is added to the acquisition cost of the shares.

How much is the furniture deduction?

The standard deduction is at most €40 a month for a studio or a room and €60 a month for a larger home.

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Sources

The article is general information and does not replace the guidance of an authority, a lawyer or an adviser. Check up-to-date information from the sources.