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Amount and payment of general housing allowance

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General housing allowance reduced in 2024, will no longer be available for owner-occupied homes starting in 2025

Parliament has approved cuts to the general housing allowance, which will reduce the rates of the allowance in 2024. Most of the changes to the general housing allowance will take effect on 1 April 2024. The changes will be applied to general housing allowances currently in payment the nexttime they are reviewed. General housing allowance will also no longer be available for owner-occupied housing as from 1 January 2025. 

Learn more about the changes to general housing allowances

Housing allowance can cover up to 80% of your housing costs. It is not available for all of your housing costs. Instead, there are specific maximum amounts for each type of housing that can be recognised as housing costs. The allowance can be paid for example towards your rent or maintenance charge.

How is the amount of the housing allowance calculated?

The housing allowance is calculated as follows: A basic deductible is first subtracted from the recognised housing costs. The housing allowance is equal to 80% of the remaining amount.

Maximum housing costs

The maximum amount of housing costs based on which you can get housing allowance is also specified by law. That amount is referred to as maximum housing costs.

The maximum housing costs represent the largest housing allowance you can get, even if your actual housing costs are higher.

Basic deductible

The size of the basic deductible depends on

  • the household's monthly income before deduction for taxes
  • the number of adults and children in the household.

The bigger the income is, the larger the deductible. If the income is very small, there is no basic deductible at all.

For more details, have a look at the calculation formula behind the housing allowance.

Person living alone in rental housing

Jaakko lives alone in a rental home, which is located in Turku. He pays EUR 700 in rent each month. Jaakko's income before taxes comes to EUR 800 per month. Because Jaakko’s income is small, there is no basic deductible.

Up to EUR 447 per month can be recognised as Jaakko’s housing costs. The housing allowance is calculated on the basis of the maximum amount of housing costs. It is not calculated on the basis of the rent (EUR 700) paid by Jaakko.

The housing allowance that Jaakko gets is equal to 80% of his housing costs, or EUR 413 x 0.80 = EUR 357,60 per month. Jaakko pays EUR 342,40 per month himself (EUR 700 – EUR 357,60 = EUR 342,40).

Taxation of the housing allowance

Housing allowance is tax-free income.

Payment of the housing allowance

Kela pays the housing allowance into your account on the first business day of the month. If you are granted the housing allowance with retroactive effect, it is paid right away. The housing allowance is available retroactively for one month from the date of the application.

Kela sends information about the housing allowances paid out to the national incomes register within five days of the date of payment.

Housing allowances that are less than EUR 15 per month are not paid out.

If Kela grants basic social assistance as an advance against expected housing allowance payments, such social assistance is deducted from the housing allowance.

Payment of the housing allowance to the landlord

Kela can pay the housing allowance directly to your landlord’s account if you give your consent.

Kela can also pay the allowance directly to the landlord if you have not paid some or any rent for two months in a row. In situations like this, we will contact you before transferring your payments to your landlord.

Calculation formulas

The following formula is used to calculate the housing allowance: 0.8 x (acceptable housing costs – basic deductible).

  • If the acceptable housing costs are larger than the maximum amount, the allowance is calculated on the basis of the latter.

Acceptable housing costs by type of housing

Maximum amount of housing costs

The basic deductible is calculated as follows: 0.42 x [T– (667 + 111 + x A + 246 x L)], where

T = the combined income of the household
A = the number of adults
L = the number of children
EUR 667 is the standard amount

The full rate of allowance is available on an income of EUR 667 plus EUR 111 for each adult and EUR 246 for each child in the household. These amounts are tied to the National Pensions Index (About Kela section).

Last modified 19/1/2024

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