1. Pragmatism or Principles? Property Taxation Valuation in Finland
Mika-Petteri Törhönen, Lead Specialist
Kauko Viitanen, Professor

2. Pre-conditions for value-based property taxes; FAO and WB Study 2015
Active and efficient property market with significant numbers of properties traded each year
Market is transparent in which the prices can be discovered.
Comprehensive register of properties
Characteristics and attributes of properties are recorded
Valuers exist who are able to estimate the market value of properties in a consistent and accurate fashion

3. Key Challenges to Value Based Property Taxes
Political will
Conservative mind-sets
Regulatory hurdles
Capacities
Business model development
Resources (smallest problem)

4. Finland – A Nordic Welfare State
High taxes (43% vs. 34.3% OECD)
Free:
Health care
Education
Social services
‘Everyone is equal before the law’
‘No one shall be treated differently’

5. Property Taxes and Valuation
Municipal value-based property taxes of 0,80–1,55 % levied on
Land
Building
Increasing demand for local revenue sources
Ageing population need more services across the country
Income tax revenue concentrates to cities
Sales comparison method used for land plots
Replacement cost method with age deduction used for buildings
Very few complaints, good collection rate

6. Land and Building

7. Modern
Finland

8. Helsinki
New

9. Property Valuation Issues
Low yield; 1.4% of GDP vs. 1.86% OECD and 4.1% UK
Comparison land sales rare in city centres
Standard replacement cost tables applied regardless of the location
Condominiums divide building taxes to apartment owners based on area, not based on value of each apartment
Last comprehensive valuation carried out 11 years ago

10. Taxation Valuation Equality
Top floor Seaview apartment owner may pay the same tax per area with a parking lot view owner in the ground floor
Building tax value may be the same for an abandoned building and ‘equivalent’ building in a prime market location
Building tax value may be the same in the capital city centre and remote rural town suburb
True property tax rates of apartments often lower in the city centre than in the suburb
Are everyone equal before the property taxation?

11. Reform of Simplification and Automation
Unify the property tax base to the objects in the land register and cadastre
Value and levy taxes to land and buildings jointly (standalone properties)
Open access to market price data
Register, publicise, value and tax condominium apartments separately
Create Mass Valuation system for annual valuation of each property

12. Takeaways Principle: Note: Suggestions:
Register, value and tax properties as they sell in the market (land and buildings together, apartments on their own).
Note:
Separate land and property taxes may result to unequal taxation
Unified property taxes and application of true market values lead to equitable property taxation
Suggestions:
Apartment valuation should be based on comparison of apartment sales rather than on building values
Good land records and valuation infrastructure merit a mass valuation system that produce new values annually.

13. Many thanks for listening
Mika-Petteri Törhönen
Kauko Viitanen