Example calculation: Generational handover of a forest estate to two siblings

In this example, the forest estate is divided between two siblings, and the estate’s main building is also included in the handover.

Spouses Veera and Veikko gave up agriculture in the 1990s, and are still living at the estate owned by Veikko. The estate includes 100 hectares of forest. The fair value of the forest is EUR 400,000. The fields have been sold. The central plot’s value, including the main building, is EUR 150,000.

The spouses have two children, Esko and Ella. Both are interested in forest management. Ella is also interested in moving to the countryside to live in her childhood home. The family decides to make separate sales with Esko and Ella.

The son, Esko, buys a parcel of 70 hectares of land from his father at a price of 76% of the fair value of the land. Esko does not incur gift taxes on the purchase. An advance ruling was requested from the tax administration before the sale. The disposal gain is tax-free for the father, Veikko.

The daughter, Ella, with her spouse, buys a parcel of 30 hectares of land from her father with the same principles as Esko. They also buy the central plot of the estate with its buildings at a price of 76% of its fair value. The sale requires the permission of the mother, Veera, to sell their shared home. Ella and her spouse do not incur gift taxes (an advance ruling was requested). For Veikko, the sale of the parcel of land is free from disposal gain tax as a sale to a family member, and the sale of the home and plot is free from disposal gain tax as a sale of his own apartment.

Esko and Ella, with her spouse, can deduct 60% of the acquisition cost of the forest in their forest taxation.