Real Estate Tax Reform: Changes for Agriculture and Forestry

Agricultural and forestry land is valued nationwide according to the same regulations, which, however, differ from the previous regulations in certain respects.

For agriculture and forestry, all states apply the regulations of the federal model. This results in the following changes compared to previously:

• West Germany: In the western federal states, the reform will result in a division of existing economic units. Residential buildings or parts of buildings that serve residential purposes within a farm used for agriculture and forestry, together with the associated open spaces, are to be assigned to real property from 2022. They will be separated from the agricultural and forestry business and will receive a separate file number as an independent economic unit.

• East Germany: In the eastern German states, there is a change from user to owner taxation. According to this, the owner of the real estate is now obliged to pay the declaration tax and no longer the user.

An agricultural and forestry enterprise within the meaning of the Valuation Law does not require a minimum size, nor does it require full agricultural and forestry management or self-cultivation. Individual plots of land that are leased out can also be agricultural and forestry operations.