Inheritance Tax in Estonia 2026 — What You Need to Know

Estonia does not have a separate inheritance tax. When a person accepts an inheritance, they do not pay tax to the state just because they received inherited assets.

Taxes may arise later, especially if the inherited property is sold. The key points are:

1. Receiving an inheritance is not taxed as income.

2. Selling inherited real estate may trigger income tax if the sale is not exempt.

3. For inherited or gifted real estate, the acquisition cost is generally limited to the documented expenses made by the heir or recipient, not the market value at the time of inheritance.

If you use an inherited apartment or house as your actual home until the sale, the sale may be income-tax exempt. This exemption can be used for one home sale every two years.

Note: This article is a general overview. Before selling inherited property, it is worth checking your case with the Estonian Tax and Customs Board, a notary or a tax adviser.

Introduction

When someone inherits an apartment, a house, land or other assets, one of the first questions is simple: do I have to pay tax right away?

The short answer is: Estonia has no separate inheritance tax. An heir does not pay tax simply because they received an inheritance.

But that does not mean there are no costs or tax issues at all. There are two different moments to keep in mind:

• accepting the inheritance — generally no income tax arises;

• selling the inherited asset later — income tax may apply.

Below we explain when tax may arise, when a sale can be tax-free and which documents should be kept.

Does Estonia have inheritance tax?

No. Estonia does not have a separate tax calculated on the value of the inheritance or on the family relationship between the deceased and the heir.

This means that a child, spouse, sibling, distant relative or a person named in a will does not pay a separate inheritance tax when accepting the inheritance.

However, liabilities may also pass to the heir. The estate may include loans, tax debts or other obligations. For that reason, it is important to review the full estate before accepting an inheritance, not only the value of the assets.

What costs and taxes may come with an inheritance?

There is no inheritance tax, but the following costs or taxes may still be relevant.

1. Notary fees and state fees

Inheritance proceedings are handled by a notary. In practice, this usually means notary fees and state fees. If the estate includes real estate, the ownership change must also be entered in the land register.

These are not inheritance taxes. They are procedural and registry costs.

2. Income tax when selling inherited property

Accepting an inheritance is not taxed as income. Income tax may arise when you later sell inherited property.

For real estate, the main question is whether the sale is exempt or taxable.

The general formula for taxable gain is:

sale price – acquisition cost – directly related documented selling expenses = taxable gain

For inherited or gifted real estate, there is an important rule: the acquisition cost generally includes only the documented expenses made by the heir or the gift recipient. The market value at the time of inheritance does not automatically become your acquisition cost.

This is one of the most common misunderstandings. If you inherit an apartment worth 120,000 euros at the time of inheritance, that does not automatically mean that 120,000 euros can be deducted later as a cost when you sell it.

Example: inherited apartment sold soon after inheritance

Scenario: - You inherit an apartment. - You do not use it as your home. - You sell it for 120,000 euros. - Documented costs related to the inheritance, valuation and sale are 3,000 euros. Taxable gain: 120,000 – 3,000 = 117,000 euros Income tax at 22%: 25,740 euros

This may seem strict, which is why it is important to check whether any exemption applies before selling.

When is the sale of inherited real estate tax-free?

The most important exemption concerns the sale of a home.

If you sell a dwelling that you used as your actual home until the sale, the gain is generally not subject to income tax. This can also apply to inherited property.

Three points matter:

• the dwelling must be your actual home;

• it must be used as your home until the sale;

• the exemption can be used for one home sale every two years.

The law does not say that you must live in the property for exactly one year. What matters is actual use as a home. A population register entry can help, but registration alone may not be enough. If needed, actual residence can be shown with utility bills, an internet contract, statements from neighbours or similar evidence.

Example: you inherit an apartment, move in and sell later

Scenario: - You inherit an apartment in January 2026. - You actually move into it. - You use it as your home until the sale. - You sell it in 2027. - You have not used the home sale exemption for another property in the previous two years. Income tax: 0 euros

Do you need a valuation at the time of inheritance?

A formal valuation can be useful, but it should not be confused with the acquisition cost for tax purposes.

A valuation report can help if:

• there are several heirs and the property must be divided fairly;

• you want to justify the sale price;

• a bank, notary or agreement requires a value;

• you want to avoid disputes between co-heirs.

However, a valuation report does not automatically mean that the market value at the time of inheritance can be deducted when calculating income tax. For inherited real estate, the key tax documents are those that prove the heir’s own expenses.

It is worth keeping:

• the certificate of succession;

• land register documents;

• invoices for notary fees and state fees;

• the valuation invoice;

• the real estate agent’s invoice;

• the sale contract;

• proof of improvement costs, if the costs were documented and related to improving the property.

Land tax on inherited real estate

If you inherit real estate, you become the owner. This may create a land tax obligation.

Land tax is paid by land owners or users. It applies to private houses, plots of land and apartment ownerships. For apartments, land tax is usually linked to the proportional share of land attached to the apartment ownership.

In 2026, the main land tax rate ranges are:

The exact rates and benefits are set by the local municipality.

In 2026, the home-owner land tax benefit is amount-based. The municipality decides the amount, which may range from 0 to 1,000 euros.

VAT on the sale of inherited real estate

A private individual selling their own ordinary apartment or house usually does not charge VAT.

VAT can become relevant if the sale is connected with business activity or if the real estate transaction is not covered by a VAT exemption. Special rules may apply to:

• a new building before its first use;

• a substantially renovated building before it is put back into use;

• undeveloped building land;

• certain commercial real estate transactions where the seller is VAT-registered and uses the option allowed by law.

Since 1 July 2025, the standard VAT rate in Estonia is 24%. If the inherited assets include commercial property or property connected with business, VAT should be checked separately before the transaction.

Typical situations

Situation 1: you inherit an apartment and sell it immediately

If the apartment is not your home and no exemption applies, the sale may be taxable. In that case, the tax calculation does not automatically use the market value at the time of inheritance. Only your own documented expenses can generally be deducted.

Situation 2: you inherit an apartment and move in

If you actually use the apartment as your home until the sale and the two-year rule is met, the sale may be tax-free.

Situation 3: there are several heirs

If several heirs sell the property together, each heir’s share is considered separately. Each person declares their own part according to the income or gain they received.

Situation 4: inherited property is sold at a loss

If there is no taxable gain, there is no income tax. However, you should not assume that a real estate loss can automatically be offset against other income. If this matters in your case, check it with the Tax and Customs Board or a tax adviser.

How to declare the sale of inherited real estate

If the sale is taxable, it must be declared in the individual income tax return.

The general rule is:

• the income is declared in the year following the year in which the gain was received;

• the tax return deadline is 30 April;

• income tax must be paid by 1 October of the year in which the return is filed.

Example:

- You sell an inherited apartment in August 2026. - If the sale is taxable, you declare the income in the 2027 income tax return. - The filing deadline is 30 April 2027. - The payment deadline is 1 October 2027.

Documents usually do not need to be attached to the return immediately, but they should be kept. The Tax and Customs Board may later ask for proof of costs or of the exemption.

Common mistakes

Mistake 1: assuming that the market value at inheritance is the acquisition cost

This is the biggest risk. For inherited or gifted real estate, the market value at the time of inheritance generally cannot automatically be deducted as a cost.

Mistake 2: misunderstanding the home sale exemption

The law does not require exactly one year of residence. At the same time, a population register entry alone is not enough if the person did not actually live there.

Mistake 3: not keeping cost documents

Only documented costs can be deducted from taxable gain. Keep invoices, contracts and payment confirmations.

Mistake 4: forgetting land tax

After inheriting real estate, the owner may have to pay land tax. In 2026, rates and home-owner benefits depend on the local municipality.

Mistake 5: making the wrong VAT assumption

A private person selling a normal dwelling is not the same as a VAT-registered business selling commercial property. Commercial property, new buildings and building land should be checked separately.

Frequently asked questions

Is there inheritance tax in Estonia?

No. Estonia does not have a separate inheritance tax. Accepting an inheritance is generally not taxed as income.

Is the sale of an inherited apartment always tax-free?

No. The sale may be tax-free if the apartment was used as your actual home until the sale and the two-year rule is met. If no exemption applies, income tax may arise.

Does the market value at the time of inheritance become the acquisition cost?

Generally, no. For inherited or gifted real estate, the acquisition cost mainly includes the documented expenses made by the heir or gift recipient.

Do I have to live in the inherited apartment for at least one year?

The law does not set a fixed number of days or a one-year rule. What matters is that the dwelling was your actual home until the sale. The exemption can be used for one home sale every two years.

Is a population register entry enough?

It helps, but it is not decisive on its own. If needed, you must be able to show that you actually lived there.

Can land tax apply to an apartment?

Yes. In apartment ownership, land tax may apply to the proportional share of land attached to the apartment. The exact amount depends on the land value, the municipality’s rate and possible benefits.

When must the sale of inherited real estate be declared?

If the sale is taxable, it must be declared in the income tax return for the year following the year in which the gain was received. The usual deadline is 30 April.

Do I need to notify the Tax and Customs Board before the sale?

For a normal private real estate sale, you do not usually need to notify the Tax and Customs Board before selling. Taxable income is declared later in the income tax return.

Summary

Estonia does not have a separate inheritance tax. Receiving an inheritance generally does not create income tax.

The key issue arises when inherited property is sold. If the inherited apartment or house was your actual home until the sale and you have not used the same exemption in the previous two years, the sale may be tax-free.

If no exemption applies, remember that the acquisition cost of inherited or gifted real estate is not automatically the market value at the time of inheritance. The deductible costs are mainly your own documented expenses.

A practical checklist:

1. check before the sale whether the home sale exemption applies;

2. keep all documents for notary fees, state fees, valuations, agent fees and improvement costs;

3. check your land tax obligation in the e-MTA portal;

4. check VAT separately for commercial property, new buildings or building land;

5. for larger transactions, ask the Tax and Customs Board or a tax adviser before signing the contract.

Need help selling inherited property?

If you want to discuss the sale of an inherited apartment, house or land, we can help you think through the situation and, if needed, refer you to a notary, valuer or tax adviser.

We can help if:

• there are several heirs;

• the property is in another city or in poor condition;

• the estate has debts or disputes;

• you want to sell quickly;

• you need clarity on documents and possible costs before selling.

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