Declaring Real Estate Income: What You Need to Know If You Sold or Rented Property Last Year
When should income from real estate be declared and when not, what data should be added to the declaration itself and what should be deleted from it? Kinnisvara24 CEO Urmas Uibomäe explains the most important things to remember when filling out an income declaration.
The declaration of last year's income begins on February 16th, and those who sold real estate last year or rented it out need to know several nuances when filling out the declaration about when to pay income tax and when not to.
If you sold real estate in 2025
"Profit from selling or exchanging real estate is generally subject to income tax. Income tax must be paid on the difference between the sale and purchase price, but there are also a number of exceptions," explains Kinnisvara24 CEO Urmas Uibomäe. For example, the sale is tax-free, meaning you don't have to pay income tax to the state if you sell your own residence and have not made a similar transaction in the last two years, a summer cottage or garden house where the property is not larger than 2500 square meters and the property has belonged to the owner for at least two years, or land returned during the land reform. If there is a pre-filled line in the income declaration about the transaction, you can delete it, but you must also add the reason. If income tax still needs to be paid on a transaction with real estate, but there is no information about the transaction in the declaration, you must add it yourself. Uibomäe also reminds that documented improvement costs can be deducted from the income earned from selling real estate.
The exceptions also apply to the sale of inherited property. "If you sell an inherited residential space that was returned under land reform or which you used as your residence and have not sold any other residence in the previous two years, you have no obligation to pay income tax. However, if you sell inherited or gifted property that was not your official residence, you must pay income tax on the entire sale amount," explains Uibomäe.
If you are in the rental business
When renting real estate, you must declare all rental income earned throughout the year. However, the law allows you to deduct 20% from the income obtained from renting residential space to cover costs. You do not need to submit cost documents for this. It is important to remember that in a pre-filled declaration, the deduction is made automatically, you must not do it yourself. "This benefit does not apply, however, if the rental income has been obtained from the rental of commercial space, a garage or some other such space," says Uibomäe.
It is also important to distinguish between rental income and utility service costs. Rental income does not include incidental rental costs, building maintenance and improvement costs, or costs related to normal use of residential space that the tenant pays to the housing cooperative or service provider. However, if the tenant pays loan payments or land tax on behalf of the landlord, these amounts must also be counted as part of the rental income.
Special considerations must be kept in mind when it comes to accommodation services, or if residential space is offered for temporary accommodation through Airbnb or Booking.com. In this case, the income received must be declared and since this is rental income, there is no possibility of deducting 20% of costs. There is no possibility of avoiding this obligation, as platform administrators have had an obligation since 2023 to provide information to the Tax and Customs Board about sellers and service providers operating on their platforms and their earned income.
The declaration of income lasts until the end of April. The most convenient way to do this is through the Tax and Customs Board's web environment e-MTA.
