Household Tax Deduction — How to Take Advantage of the Tax Benefit for Home Maintenance

The household tax deduction is a tax benefit with which the government encourages the use of professionals for home maintenance, upkeep, and improvement work. The deduction is available for the labor portion — materials and supplies are not covered. The purpose of the household tax deduction is to reduce the shadow economy and support the use of services by households.

The deduction is made directly from taxes, making its benefit significant. Unlike many other tax deductions that reduce taxable income, the household tax deduction directly reduces the amount of tax payable. This makes it an extremely effective way to save.

The household tax deduction is available to all taxpayers who order eligible work for their home. The deduction can be claimed for work done at your permanent residence, vacation home, or the home of your parents or grandparents. Tenants also have the right to the deduction for eligible work done in a rental apartment, provided they pay for it themselves.

It's important to understand that the household tax deduction is not the same as the domestic help deduction. The household tax deduction specifically concerns services purchased from an outside company or entrepreneur, while domestic help refers to, for example, cleaning or care work done by a hired employee.

The household tax deduction applies broadly to home maintenance and upkeep work. The deduction covers maintenance and renovation work on the home and its yard area, as well as domestic, care, and nursing work. Typical eligible property maintenance tasks include:

• Sewer cleaning and maintenance — pressure flushing, mechanical clearing, sewer camera inspection
• Chimney sweeping and fireplace maintenance — flue cleaning, fireplace restoration
• Ventilation duct cleaning — ductwork cleaning, filter replacement work
• Heating system maintenance — oil burner service, geothermal pump service, radiator network balancing
• Roof washing and painting — moss removal, roof painting, flashing replacement
• Appliance installation — range hood installation, washing machine connection
• Terrace maintenance and yard work — terrace oiling, patio paving, fence building
• Electrical work — adding outlets, light fixture installation, electrical system upgrades
• Interior surface renovation — painting, wallpapering, floor sanding and varnishing

Important: The work must be performed at your permanent home, vacation home, or your parent's home. Work done in a rental apartment is also eligible, as long as the tenant pays for it themselves.

New construction, material costs alone, and repair work on household appliances done outside the home (e.g., workshop repairs) are not eligible. Work commissioned by a housing company using maintenance charges is also not eligible for the deduction.

The maximum household tax deduction is 2,250 euros per person per year. A spouse can apply for their own deduction separately, so a couple can deduct up to 4,500 euros per year combined. This is a significant tax benefit, and failing to take advantage of it is essentially throwing money away.

The amount of the deduction depends on how the work is purchased:

• Work purchased from a company: The deduction is 40% of the paid labor compensation (VAT included). This is the most common method, and most home maintenance services are purchased from companies.
• Employment: If you hire a worker directly as an employee, the deduction is 15% of the salary paid. Additionally, you can deduct the employer's social security contributions.

Deductible is 100 euros per year. This means the first 100 euros of the tax deduction is always your own responsibility. The deductible is subtracted only once per year, even if there are multiple eligible jobs.

In practice, this means that to get the full 2,250-euro deduction, you need to purchase at least 5,875 euros worth of work from a company (labor portion). Calculation: (5,875 euros x 40%) - 100 euros deductible = 2,250 euros.

The household tax deduction can be applied for in two ways: in the tax return or in advance on the tax card. Both methods are straightforward and can be handled electronically through the MyTax service.

Method 1: In the tax return

Report the deduction with the pre-filled tax return in spring. Enter the following information in MyTax for each eligible job:

• Service provider's name and business ID
• Work completion date or period
• Amount of labor compensation paid (VAT included)
• Type of work (maintenance, upkeep, installation, etc.)

Method 2: In advance on the tax card

If you know in advance that you will be commissioning eligible work, you can request a change to your tax card. In this case, the benefit of the deduction will be visible in your monthly pay as a lower withholding tax. This is especially convenient if you know at the beginning of the year that you are planning, for example, larger renovations.

Receipt retention: Keep all invoices and receipts for at least 6 years. The tax authority may request to see the documents, which must clearly show the labor portion separated from materials. A good invoice clearly shows the labor and material portions separately.

The benefit of the household tax deduction is best understood through concrete examples. Below are four typical situations where the deduction provides significant savings.

Example 1: Chimney sweeping and sewer maintenance

Tiina orders chimney sweeping (180 euros) and sewer pressure flushing (350 euros) for her house. Both prices are entirely labor.

• Total labor portion: 530 euros
• 40% deduction: 212 euros
• Deductible: 100 euros
• Actual tax deduction: 112 euros
• Tiina's actual cost: 530 euros - 112 euros = 418 euros

Example 2: Broader annual maintenance

Matti has the following maintenance work done during the year: ventilation duct cleaning (labor 650 euros), roof washing and maintenance (labor 890 euros), and heating system annual service (labor 280 euros).

• Total labor portion: 1,820 euros
• 40% deduction: 728 euros
• Deductible: 100 euros
• Actual tax deduction: 628 euros
• Matti's actual cost: 1,820 euros - 628 euros = 1,192 euros

Example 3: A couple using both deductions

Liisa and Pekka renovate a bathroom. The total invoice is 12,000 euros, of which labor is 7,500 euros and materials are 4,500 euros.

• Labor portion: 7,500 euros
• Liisa's deduction: 7,500 euros x 40% = 3,000 euros — capped at maximum 2,250 euros, minus 100-euro deductible = 2,150 euros
• Pekka's deduction: from the remaining labor portion (7,500 euros - 5,875 euros) = 1,625 euros x 40% = 650 euros, minus 100-euro deductible = 550 euros
• Combined tax deduction: 2,700 euros
• Actual cost: 12,000 euros - 2,700 euros = 9,300 euros

Example 4: Work done at a parent's home

Sanna has sewer maintenance (420 euros) and yard work (580 euros) done at her elderly mother's house. Total labor portion is 1,000 euros.

• Total labor portion: 1,000 euros
• 40% deduction: 400 euros
• Deductible: 100 euros
• Actual tax deduction: 300 euros

Note that Sanna receives the deduction in her own taxes, even though the work is done at her mother's home. This is an excellent way to help aging parents with home maintenance.

Getting the full benefit of the household tax deduction requires some planning. With these tips, you'll get the most out of the deduction:

1. Consolidate work strategically

Consolidate your home maintenance tasks in the same year to maximize the deduction benefit. For example, order sewer maintenance, chimney sweeping, and ventilation cleaning in the same year. This way, the deductible (100 euros) is subtracted only once.

2. Split large renovations across two years

If a renovation's labor costs exceed one person's maximum deduction (5,875 euros in labor), consider splitting the work across two calendar years. This way you can utilize two years' worth of deductions.

3. As a couple, use both deductions

Remember that both spouses can apply for their own deduction. Split the invoice so that both get the maximum benefit.

4. Request an itemized invoice

Always make sure the service provider itemizes labor and material portions on the invoice. Without itemization, the tax authority may reject the deduction. Talon Toveri Oy always clearly itemizes the labor portion on our invoices.

5. Check the registers

Always verify that the service provider is registered in the prepayment register and the VAT register. You can check the information at the Business Information System (ytj.fi). Talon Toveri Oy is naturally registered in both.

6. Remember the vacation home

Work done at a vacation home (cottage, summer house) is also eligible for the household tax deduction. Chimney sweeping, sewer maintenance, or roof washing at your cottage are all eligible.

Many Finns fail to take advantage of the household tax deduction or make mistakes in their application that lead to the deduction being rejected. Avoid these most common pitfalls:

1. The deduction is not applied for at all

The most common mistake is simply not applying for the deduction. According to the Tax Administration, a significant number of eligible households fail to use the deduction. Remember to check with every maintenance work invoice whether the work is eligible.

2. Attempting to deduct material costs

The household tax deduction only covers the labor portion. If the invoice doesn't separate labor from materials, the tax authority may reject the entire deduction. Always ensure clear itemization.

3. The service provider is not in the registers

If the service provider is not in the prepayment register, you won't get the deduction. Always check before ordering. Naturally, you cannot get a deduction for undeclared work, and it is also illegal.

4. Receipts are not retained

The tax authority can request receipts for up to six years. If a receipt cannot be found, the deduction can be clawed back. Save receipts electronically or keep them in a safe place.

5. Applying the deduction for new construction

New construction is not covered by the household tax deduction. The deduction is only available for maintenance, upkeep, and improvement work on existing homes. The boundary can be ambiguous for large additions — ask the tax authority if necessary.

6. Paying in cash

Cash payments are not eligible for the household tax deduction. Always pay by bank transfer or card, so there is a verifiable record of the payment. This is also important in combating the shadow economy.

7. Calculating the deductible incorrectly

The 100-euro deductible is per year, not per invoice. Some people subtract the deductible from each invoice separately, which unnecessarily reduces the deduction. The deductible is subtracted only once from the total annual deduction amount.