When you buy a service for your home, such as renovation or cleaning, you can deduct the cost of the work from your tax bill using the household allowance. In other words, you save money. In this guide, we explain the household credit in more detail and give practical examples of how to make use of it. In one package, you will receive up-to-date information and tips on how to maximise your savings.

The household deduction reduces the tax burden

The household allowance is a tax relief for anyone who buys an outside service for their home, either from a business or hires an employee to do the work. You can get a deduction for things like home renovation, cleaning and care work. The household allowance is primarily deducted from tax on earned income and capital income and can save significant amounts of money. The deduction can be made from both earned income and pension tax. So the household allowance is not just for working people, it is also an important benefit for many pensioners.

The purpose of the household allowance is to encourage households to carry out various types of work, thereby promoting self maintenance of their homes and combating the informal economy.

Household tax credit amount 2022 and deductible

The household allowance is limited to €3,500 per person per year for renovation services that do not use oil heating and for household care and maintenance services. The deductible for these services is 60% of the work component and the co-payment is €100.

For other renovation work, the deduction is up to €2 250 per person and the deduction for labour is 40%. The co-payment is the same as for the above services, i.e. €100.

A couple can get up to €7 000 a year in deductions. The household allowance can only be claimed for the part of the work paid for – you cannot get a deduction for the cost of materials and supplies, for example. However, as a consumer, you do not have to worry about the amount of work involved, as the cost of the work will be reflected in the provider’s bill. If, for some reason, the share of the work has not been broken down, ask the company for a detailed invoice.

The amount of the deduction is calculated by first multiplying the cost of the work by 40% or 60% and then deducting a deductible of €100. Here are a couple of examples:

Example 1. You live alone and hire a cleaning service from a company. As the work is domestic, the deduction for work is 60%. The work is €1 200 on the invoice, so you get a deduction of €620. The deduction is determined as follows:

60 % × 1 200 € – 100 € = 620 €

Example 2. You live alone and are having your plumbing renovated. As the work is renovation work, the deduction for labour is 40%. The work portion of the invoice is €6 000, so you get a maximum deduction of €2 250. The deduction is determined as follows:

40 % × 6 000 € – 100 € = 2 400 €. However, the maximum deduction for renovation costs is €2 250.

Example 3. You and your spouse are having a plumbing renovation and the bill for the work is €6 000. As this is renovation work, the deduction for labour is 40%. One of you pays one third of the bill and the other two thirds. The amount of the deduction is distributed to you as follows:

Person 1: 40% × €2 000 – €100 = €700
Person 2: 40% × 4 000 € – 100 € = 1 500 €

The Tax Administration’s handy calculator also helps you calculate the amount of the household allowance.

These tips will help you save more

There are a couple of things to bear in mind for the household allowance to maximise savings. Take at least these tips into account:

Tip 1: deductible only for one of the residents

If the household allowance is up to €3 500 and you live with a partner, it is better to claim the allowance for only one of them, as the excess is only paid once.

Tip 2: Save twice as much at the turn of the year

The taxpayer grants a deduction for the year in which the invoice is paid. If the service qualifying for the deduction is provided at the turn of the year and the resulting invoices are paid in two different calendar years, the deduction can be used in both years. This means that the maximum deduction can be doubled to between €5,000 and €7,000 per person, depending on the service. If the deduction is spread over two years, the €100 deductible is taken into account in both years.

Doubling cannot be done for a renovation financed by a loan. In this case, the deduction is granted according to the date of signature of the financing agreement.

Note! However, the household allowance must not be artificially spread over two years. For example, a contractor cannot do a renovation in the summer and bill half of it in January next year. Therefore, the service must be genuinely timed to the turn of the year, and the service provider must not deviate from the normal billing conditions in order to maximise the household allowance. If you just have the reading interest, the tax authorities’ website has relatively detailed guidelines on the household tax credit.

Tip 3: don’t count on the permanence of the household allowance

The household allowance is a very substantial tax relief and is therefore the subject of much public debate. The deduction has been subject to frequent changes, making it difficult to predict the amount for future years. So don’t put off renovations for years in the hope that your household deductions will remain unchanged, but take advantage of the taxpayer’s benefit sooner rather than later.

Applying for the household allowance – often one form is enough

The household allowance is not paid automatically, but you have to report it to the tax authorities. There are a couple of different ways to claim the deduction. If you want to file your return electronically and quickly, you should report the deduction on your 2022 tax card or tax return. If you want to file by post, you can download and print the necessary forms from the tax authorities’ website. In most cases, one form, 14A, is sufficient.

The deduction is claimed in connection with the tax return for the tax year or, alternatively, it can already be taken into account in advance taxation. To be taken into account for the purposes of deduction, the work must have been carried out and the deductible expense must have been incurred or the wages paid. If your taxes are not sufficient to make deductions, you will not be able to deduct the costs in future years. If you forget to claim a deduction, you have three years to file a claim with the tax authorities.

Please note that you must find out for yourself whether you are eligible for the household allowance and ensure that the company is registered in the pre-tax register. If you hire an employee, you will need his or her personal identity number to declare the household allowance. If for any reason you forget to claim the household allowance and the tax year has ended, you can appeal later by filing an adjustment claim.

Renovating pipes is a good way to take advantage of the reduction

If you live in a detached house, you should consider taking advantage of the household tax credit for plumbing repairs. In Finland, there are many detached houses where the technical life of the plumbing is at the end of its useful life or has long since passed. This can lead to nasty and expensive water damage that is not covered by insurance. If you have old plumbing in your private house, you should book a plumbing survey, which is completely free of charge. If necessary, we can also provide you with a quotation for plumbing repairs, either in connection with a survey or via a form.
It’s easy to declare the household allowance to Taloturva’s customers, as we send them a pre-completed household allowance form and a household allowance certificate. Home renovations are always deductible.

Conditions for the household allowance

The household allowance is subject to a few conditions that you should take into account before applying for the allowance.

Several people in a household can claim a deduction for the same service. This is possible when people are married or in a registered partnership. A partner is entitled to deductions if he or she has contributed to the cost of the work and lives in the same accommodation. A child living at home may also qualify for the deduction if he or she has income that has contributed to the payment of deductible expenses. However, the person claiming the deduction must be able to prove to the tax authorities that the expenses were paid, for example by means of a named invoice and a transaction.

The household allowance is always personal. If for any reason you want to transfer the deduction to another person, the transfer can only be made to a married or registered partner. If, on the other hand, the deduction is claimed by only one person and the maximum deduction is exceeded, the tax administration will automatically deduct the excess from the spouse’s tax bill. So a tax bear can also be fair!

The tax authorities define and list precisely all the work that is deductible as household work. You can get a deduction for maintenance and renovation work, such as plumbing repairs, or for painting an outbuilding, for example. However, for example, chimney sweeping and moving house are not covered by the household allowance. If you are wondering whether a renovation is eligible for the deduction, check the table of deductible services compiled by the tax authorities.

Remember also that the work must be done in your own home or in a holiday home. Work done at the home of parents or grandparents is also deductible. The deductible service does not have to take place within the borders of Finland, but can also be deducted for work carried out in other European Economic Area (EEA) countries. The country of residence can therefore be Finland, but it can also be Denmark or Spain.

If you renovate the work with borrowed money, you are entitled to a deduction, but the cost of the renovation loan is not deductible. For financing agreements, the year of cost reduction is the year in which the financing agreement is concluded. However, if the renovation is not started until the following year, the deduction year is the year in which the work is done. If, on the other hand, you have received compensation from an insurance company for repair work due to water damage, for example, you cannot claim a household allowance.

As mentioned earlier, the company must be registered in the pre-tax register at the time of the order – otherwise no deduction will be granted. This is a strict requirement from the tax authorities, so you should always check before ordering a service. It does not matter if the company is later removed from the register. During the ordering phase, you can easily and quickly check the YTJ company search.

You cannot receive several grants at the same time and therefore the grants you receive will also affect your household allowance. If you receive a subsidy for the same work, you cannot get a deduction. For example, if you receive childcare allowance, you cannot get a deduction for childcare. You can read more about the impact of subsidies on the household tax credit on the Tax Administration’s website.