Transfer of agricultural land
April 7, 2017 | 30,00 EUR | answered by Ginster Frank
Hello, my mother owns approximately 1 hectare of land which is registered as agricultural land. There has been no cessation of business declared so far. Now, this land is supposed to be divided among three children. Half of the land has a market value of 2.50 EUR/sqm, while the other half is designated as land for future development with a value of 35 EUR/sqm. Does this have any tax implications? In 1998, two pieces of land were transferred without any consequences. Why was this possible back then, but now significant payments are looming? Is it possible to avoid these payments by purchasing the land below market value? Thank you!
Good morning,
Taking into account your information and your fee, I would like to briefly comment on this:
Assuming the business has not been abandoned so far, the distribution leads to the termination of the business. The hidden reserves are to be dissolved. Possible tax-free allowance according to § 16 EStG and reduced tax rate according to § 34 EStG.
If there are children who also have an agricultural business, a transfer at book value - without dissolving the hidden reserves - may be possible.
Regarding the takeover in 1998, the tax office probably did not pay attention, as there seems to be a case of negligence. It may be statute-barred.
The approach of the property at a lower value than the market value in the planned transfer now will result in a capital gain within 10 years in accordance with § 23 EStG if sold.
I hope the information was helpful. I would advise you to consult a tax advisor for the termination of your mother's business. We are happy to assist you here.
Best regards,
Frank Ginster
Tax advisor
