Have you inherited farmland and are faced with the decision to sell? This process presents opportunities, but it requires careful planning to optimally realize the value, often over €25,000 per hectare, and avoid tax pitfalls. Learn how to successfully sell your inherited farmland.
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The topic briefly and concisely
The speculation period for selling inherited farmland is ten years from the date of acquisition by the deceased; if sold within this period, speculation tax may apply.
The inheritance tax depends on the degree of kinship and the value of the farmland; allowances (e.g. €500,000 for spouses, €400,000 for children) can reduce the tax burden.
The value of farmland is determined by soil quality (arable index), location, size, and soil reference values; a professional assessment is essential for an optimal selling price.
The decision to sell inherited farmland is often accompanied by complex questions. How do you determine the actual value of your land, which has increased on average from under €12,000 to over €26,777 per hectare in the last ten years? What tax obligations, such as inheritance tax or speculative tax, might you face, and how can you optimise these? This article guides you through the key steps, from assessing your farmland to clarifying legal frameworks and developing sales strategies, enabling you to make informed decisions and achieve the best possible return. With a professional valuation from Auctoa or an initial assessment via our ImmoGPT chat, you can gain clarity early on.
First Steps After Inheritance: Check Acceptance and Deadlines
After an inheritance, you generally have six weeks as the heir to decide whether to accept it. This decision is binding and should be carefully considered, as with the farmland you not only acquire assets but also potential liabilities. Find out about any encumbrances on the property. If you are part of a community of heirs, all co-heirs must decide together whether to accept or disclaim the inheritance. Addressing these points early on provides the foundation for all subsequent steps in the sale of inherited farmland. The complexity of inheritance decisions can be made easier with a neutral evaluation, such as that offered by Auctoa.
Acceptance of the inheritance is the first of several steps. Next, the land register needs to be amended.
Correct land register and clarify ownership situation
To sell inherited farmland, you must be registered as the rightful owner in the land register. Typically, you will need a certificate of inheritance, a notarized will, or a hereditary contract for the transfer. This proof must be submitted to the land registry office. The fees for correcting the land register depend on the value of the property. A correct registration provides legal certainty for the sales process and is an important proof of trust for buyers. Also clarify whether there are pre-emption rights, for example for tenants or municipalities, which may affect the sales process. More information on property valuation upon inheritance can be found in our blog.
Once ownership issues are resolved, the focus shifts to the valuation of the farmland.
Accurately determine the value of inherited farmland
An accurate valuation is crucial to achieve the optimal price when selling your inherited farmland. The value of farmland is determined by various factors, including:
Soil quality (land value index/soil index): The land value index, which reflects natural yield capacity, is a key value factor. Values between 40 and 60 are considered good soil.
Location and regional demand: Prices can vary greatly; a hectare near Munich can be worth over 250,000 euros, whereas in other regions, significantly less.
Size and layout of the plot: Larger, well-shaped plots are often more sought after.
Lease condition: If the land is leased, the contractual terms must be considered.
Standard land values: These average values, determined by appraisal committees, serve as guidance. They can be accessed online via systems like BORIS-D.
For an accurate assessment, a professional valuation report for your property is recommended. The experts at Auctoa use AI-supported analyses to provide you with a quick and objective evaluation. This is particularly important as average sales values for agricultural land in Germany have increased from just under 12,000 euros per hectare to around 26,777 euros over the past ten years. Knowing the exact value is also essential for calculating inheritance tax.
Once the valuation is complete, the tax aspects need to be clarified.
Inheritance tax: Know the allowances and tax rates
Inheriting farmland may incur inheritance tax. The amount depends on the degree of relationship to the deceased and the value of the inherited assets after deducting allowances. For example, spouses have an allowance of 500,000 euros, children 400,000 euros. For farmland that is part of an agricultural and forestry business and continues to be cultivated, significant tax relief may apply. If the business is continued for five years, for instance, up to 85% of the value can be tax-exempt. The tax rates vary according to the tax class and the amount of the taxable acquisition; in tax class I (e.g., children, spouses), they range from 7% to 30%. An accurate valuation of agricultural land is essential for this. The complex regulations of the Inheritance and Gift Tax Act (ErbStG) often make expert advice necessary. Auctoa can help you determine the value of your farmland precisely, which is an important basis for tax calculation.
In addition to inheritance tax, capital gains tax may also become relevant when selling.
Avoid speculation tax when selling farmland
If you sell inherited farmland, capital gains tax may apply if less than ten years have passed between the original acquisition by the testator and the sale by you as the heir. What matters is the profit from the sale (sale price minus the acquisition costs of the testator and selling costs). The ten-year period starts with the date of the testator's purchase contract, not with the inheritance. For instance, if the purchase was 15 years ago, no speculation tax is incurred. There is an exception to the ten-year rule if the property (if built on and used for residential purposes) was owner-occupied in the year of sale and the two preceding calendar years; however, this does not usually apply to purely agricultural land. Profits under 600 euros per calendar year from private sales are tax-free. The regulations can be found in § 23 EStG. A thorough review of the deadlines and possible costs when selling property is advisable.
Statutory pre-emption rights can also influence the sales process.
Observe statutory pre-emption rights and the Property Traffic Act
When selling inherited farmland, the Property Transactions Act (GrdstVG) must be observed. This law regulates the sale of agricultural and forestry land to secure the agricultural structure. A permit is required for the sale of areas above a certain size (often 1 hectare, varying regionally). Authorities check whether the sale would result in an unhealthy distribution of land, for example, if it is sold to a non-farmer and a farmer in need of more land shows interest. In such cases, there may be a statutory pre-emptive right in favour of farmers or settlement companies. Exceptions to the requirement for a permit exist, for example, for sales to family members or recognised farmers. The appraisal also plays a role here in transparently presenting the value. Be sure to inform yourself early about the specific regulations in your federal state, as the implementation of the GrdstVG is the responsibility of the individual states. The Agricultural Structure Improvement Act (ASVG), such as the one in place in Baden-Württemberg, further specifies these regulations.
Once all legal and tax aspects have been clarified, you can move on to the sales strategy.
geerbtes-ackerland-verkaufen
To achieve the best price for your inherited farmland, a well-thought-out sales strategy is crucial. Consider which target group might be interested in your farmland: active farmers, investors, or possibly project developers for renewable energies. The marketing can be done through various channels:
Regional estate agents with agricultural expertise: They often have a network of potential buyers.
Online portals for agricultural real estate: Here you reach a specialised audience.
Tender process: This can maximise the sale price in high demand situations. A fixed price is not set; instead, interested parties submit bids.
Direct approach: Known farmers in the area might be interested.
A professional brochure with all relevant data (location, size, soil quality, square metre prices for farmland, lease conditions, possibly tips on pricing) is essential. The experts at Auctoa not only assist you with the valuation but can also advise on developing a sales strategy. The average sales value for farmland in recent years was over 26,777 euros per hectare, with significant regional differences. Demand is often high as land is not increaseable.
The sales process ultimately results in the notarised purchase contract.
Notarial purchase contract and conclusion of the sale
Is there always a capital gains tax when selling inherited farmland?
No, capital gains tax is only payable if the farmland is sold within ten years of the purchase by the testator and a profit is made. Once this period has passed, the profit from the sale is generally tax-free.
What are the inheritance tax allowances for farmland?
The personal allowances for farmland are the same as for other assets. The allowance for spouses is 500,000 euros, for children 400,000 euros, and for grandchildren 200,000 euros. For agricultural and forestry business assets, there are additional relief schemes under certain conditions.
What is the standard land value and where can I find it?
The standard land value is an average value for properties in a specific area, determined by expert committees. You can view standard land values online through the land value information systems of the federal states (e.g., BORIS-D) or from the responsible expert committees.
Who has a pre-emption right when selling farmland?
Under the Land Transaction Act, active farmers or charitable settlement companies may have a pre-emption right, especially if the farmland is to be sold to a non-farmer and this could endanger the agrarian structure. Tenants may also have a pre-emption right under certain circumstances.
What documents do I need for the sale of inherited farmland?
Important documents include the certificate of inheritance or a notarised will, a current land register extract, cadastral maps, lease agreements (if any), evidence of soil quality (field rating), and possibly permits under the Land Transaction Act.
Can Auctoa assist me with the valuation of my inherited farmland?
Yes, Auctoa is your digital companion for objective, AI-powered property valuations. We can help you quickly and data-driven determine the current market value of your inherited farmland. You can also use our ImmoGPT chat for initial queries.
Additional useful links
The Federal Ministry of Justice provides the complete text of the Inheritance Tax and Gift Tax Act (ErbStG) of 1974 on its portal "Gesetze im Internet".
On the portal of the Federal Ministry of Justice, you will find the exact wording of Section 23 of the Income Tax Act (EStG), which contains the regulations on private sales transactions and thus on speculation tax.
The Federal Ministry of Justice provides the complete Land Transaction Act (GrdstVG) via its portal "Gesetze im Internet", which regulates the sale of agricultural and forestry land.
The Federal Statistical Office (Destatis) offers detailed tables on land purchase values in Germany.
The Statistics of the Federal Ministry of Food and Agriculture (BMEL) provides comprehensive data on rental prices and purchase values of agricultural land.
A special analysis of the purchase values of agricultural land can also be found on the website of the Federal Statistical Office (Destatis).
FAQ
Is speculation tax always applicable when selling inherited farmland?
No, capital gains tax is only applicable if the farmland is sold within ten years of purchase by the deceased and a profit is made. Once this period has elapsed, the profit from the sale is generally tax-free.
What are the allowances for inheritance tax on farmland?
The personal allowances for agricultural land are the same as for other assets. For spouses, the allowance is 500,000 euros, for children 400,000 euros, and for grandchildren 200,000 euros. For agricultural and forestry business assets, there are additional exemption rules under certain conditions.
What is the standard land value and where can I find it?
The standard land value is an average location value for plots within a certain zone, determined by expert committees. You can view standard land values online via the land value information systems of the federal states (e.g., BORIS-D) or at the responsible expert committees.
Who has a right of first refusal when selling agricultural land?
Under the Property Transactions Act, active farmers or charitable settlement companies may have a right of first refusal, particularly if the farmland is to be sold to a non-farmer, which could endanger the agricultural structure. Tenants may also, in certain circumstances, have a right of first refusal.
What documents do I need to sell inherited farmland?
Important documents include the certificate of inheritance or a notarised will, a current land register extract, cadastral maps, lease agreements (if available), proof of soil quality (soil rating), and, if applicable, permits under the Land Transaction Act.
Can Auctoa help me appraise my inherited farmland?
Yes, Auctoa is your digital companion for objective, AI-powered property valuations. We can help you quickly and data-driven determine the current market value of your inherited farmland. Also, use our ImmoGPT chat for initial questions.
