Higher land values will not mean equivalent property tax rises

Estonia’s land value has risen by a third in four years, but property tax will not automatically increase by the same amount, ERR reports. Local governments will use the new valuations as a basis for tax decisions from 2028.

The Land and Spatial Planning Board’s latest valuation puts the total value of land in Estonia at 44 billion euros. Of 780,000 cadastral units, 96% increased in value.

Land tax accounts for about 2% to 3% of local government revenue. Municipalities collected 81 million euros from the tax in 2025 and expect to receive about 90 million euros this year.

Piret Zahkna, a financial analyst for the Association of Estonian Cities and Municipalities, said councils must consider tax rates for different land-use categories, annual limits on tax increases, and available exemptions and discounts.

The annual increase limit is particularly important for landowners. Most municipalities currently use the minimum permitted limit of 10%, Zahkna said, although the approach differs for agricultural land. For 2027, 48 of Estonia’s 78 municipalities have set the limit at 10%. If a plot’s value rises by 60%, for example, its tax increase cannot exceed 10% where that cap applies.

Tartu municipality considers raising its exemption

Land values are highest in Tallinn and Tartu and their surrounding areas. In Tartu municipality, values rose by an average of 59%.

Municipality head Jarno Laur said the council was pleased that residents’ assets were gaining value, but did not want to collect the maximum possible tax. The municipality may raise its exemption for residential land if the tax becomes too burdensome. The current exemption is up to 500 euros per property, while the law allows it to be increased to 1,000 euros.

The municipality is assessing whether the 500-euro exemption will cover residential land tax in 2028. Laur said its tax increase cap is set at 30% and should provide residents with some certainty.

Land tax makes up a small share of Tartu municipality’s budget. Of the 24 million euros in tax revenue budgeted for this year, 470,000 euros is expected to come from land tax. Laur also said the municipality has extensive forest and protected land that cannot be developed. This year, residential land tax relief covered the full tax bill in 43 municipalities.

Compared with 2022, land values in Tartu city rose by nearly 20%, while values in nearby municipalities increased by more than half.