Annual repairs and modernisation projects are a routine part of every homeowner’s life. Sometimes the renovation work only entails more smaller-scale superficial work to improve the overall appearance of the home, but every now and then, more major renovations, such as plumbing renovations or bathroom remodelling, are needed.
Before getting started with the work or obtaining financing for the project, it is a good idea to spend some time familiarising yourself with the relevant taxation issues, as homeowners are able to deduct different types of repair or renovation costs in their taxation. Among other things, both costs incurred due to the renovation and any work done are tax-deductible, and some homeowners may even be able to deduct the interest on a home improvement loan in their own taxation.
Deducting repair costs is not difficult, since nowadays, you can choose to claim deductions either online using your personal online bank identifiers or by filling out a more traditional paper form.
How and if the costs can be deducted depends not only on the purpose the apartment or house is used for, but also on the nature of the project, since in the context of taxation, renovation work of residential premises is divided into two categories: annual repairs and modernisations.
The deduction also varies substantially depending on whether external workforce has been hired, or if the house or apartment is being rented out or used by its owner. It is possible to receive tax credit for household expenses for the work carried out on an apartment or property that the owner uses themselves or has rented to a near relative.
Until 2023, the interest on renovation mortgages will also be partially deductible in Finland, but as this benefit will gradually be removed, comparing different interest rates available for renovation loans will be even more important than before