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Change of ownership of a forest property as an inheritance

After the death of the old owner, the change of ownership of a forest property often takes place through inheritance. In these cases, the inheritance tax provisions are to be followed.  

The division of the inheritance or, for example, the right of possession and the marital right can be influenced through a will. A will should always be drawn up with an expert.  

The estate inventory must be made within three months of the person's death. The deed of estate inventory must be submitted within one month of its making to the tax office of the last place of residence of the deceased. 

Inheritance tax (I tax bracket) as of 1.1.2017:

Inheritance value, euros

Tax at the lower limit, euros

Tax in excess, %

20 000 – 40 000 


40 000 – 60 000 

1 500 


60 000 – 200 000 

3 500 


200 000 – 1 000 000 

21 700 


1 000 000 – 

149 700 


  • Inheritance tax category I includes the spouse, child, adopted child, grandchild, parents, grandparents or adoptive parents of the testator or the child or grandchild of the spouse of the testator. 

  • If the heir is the spouse, then in addition to the tax-free inheritance share of EUR 20,000, a spouse deduction of EUR 90,000 is made. Inheritance tax will then only be paid on inheritances of over EUR 110,000. If the direct heir is a minor child, in addition to the tax-free inheritance share of EUR 20,000, a minority deduction of EUR 60,000 is made. Inheritance tax will then only be paid on inheritances of over EUR 80,000.

Inheritance tax (II tax bracket) as of 1.1.2017:


Inheritance value, euros

Tax at the lower limit, euros

Tax in excess, %

20 000 – 40 000 



40 000 – 60 000 

3 900 


60 000 – 200 000 

8 900 


200 000 – 1 000 000 

49 500 


1 000 000 – 

297 500 


  • Inheritance tax category II includes others than close relatives of the testator.  

In connection with the inheritance, the  unused right to deforestation of the deceased is transferred to the estate or heirs. Similarly, unfinished ditch cleaning and supplementary ditching as well as forest road construction depreciation will be used by the estate administration or heirs for inheritance yields.  

The inheritance tax calculator on the Tax Administration's website allows you to calculate the amount of the inheritance tax in advance in various situations.

Ownership arrangements for an undivided estate

Ownership options 

  • Dissolution (= transformation) of the estate into a tax consortium and carrying out forestry as a tax consortium and / or as a follow-up measure, one or more of the shareholders purchase group shares from other shareholders. 
  • Distribution of the estate's assets so that one or more shareholders receive the forest and the other shareholders receive some other assets. 
  • The estate administration sells the forest property to an external party, if the shareholders have no interest in forestry. 
  • The shareholders of the estate connect the forests to an existing joint forest or establish their own joint forest (if the forest area of the estate is large enough, that is, hundreds of hectares). 
  • Dividing the forest of the estate into different properties – the problem is the fragmentation of the property structure. 

The tax consortium is a more favourable form of ownership than the estate, because in the annual forest taxation, the consortium's losses are already passed on to the shareholders' personal taxation in the same tax year. In this way, forestry losses are utilized in the taxation of shareholders' other capital income or earned income. In the estate, the losses for the tax year remain to be deducted from the estate's subsequent capital income. If no capital income is generated for the estate during the next ten years, the losses remain undeducted year by year.  

In addition, the higher capital tax on the estate (34%) will start to run as soon as the estate's capital income exceeds EUR 30,000. In ownership in the form of a tax consortium, each shareholder has his or her own personal limit value of the lower capital tax rate of 30,000 euros (30%). 

Alternative measures in inheritance distribution   

An undivided estate is converted into a tax consortium by distribution of inheritance or division of assets / distribution of inheritance (if the widow is still alive). The distribution of inheritance may include an administrative division in which the estate becomes a tax consortium or, in addition, technical property divisions (subdivision into different properties). The word division thus has two different meanings. 

If transactions are to be made between shareholders, the distribution of inheritance is always made first. Likewise, if the intention is to form a joint forest. 

The distribution of inheritance is based on an estate inventory deed or deeds, if at the same time the estates of both parents are being divided. This is often done because the shareholders of the estates are most often the same. Sometimes the division of assets / distribution of inheritance has already been made after the death of the first spouse, and then only the latter estate is distributed. In this situation, it is essential to take into account possible marriage settlement, will and advances on inheritance.  

A kind of a turning point is the internal and external assets of the estate. If the internal assets of the estate are distributed in such a way that each shareholder receives a property equal to his or her share (in euros) of the assets (may include different types of assets such as forest, money, buildings, apartments, etc.), no additional tax will be payable on the arrangements. The inheritance taxes have already been paid at the inheritance distribution stage or will be paid in the very near future.  

If someone uses their own funds, that is, funds outside the estate, to get more assets for themselves (for example, the entire forest property), the capital gains tax, transfer tax and forest deduction are always considered. 

Forest deduction and capital gains tax 

The purchase of an estate share is a trade in movable property, which does not give rise to a right to forest deduction. The purchase of a forest consortium share, on the other hand, is a sale of immovable property which gives rise to a right to forest deduction.  

The sale of the estate may be subject to the capital gains tax (if capital gains arise) even if all other conditions for the exemption from capital gains tax for close relatives are met because the sale of an estate share is a sale of movable property. 

The sale of a consortium share to the same close relative is exempt from the capital gains tax if the conditions for the capital gains tax exemption are met in all other respects. Therefore, it is advisable to make a deed of estate distribution first and only then sell consortium shares. However, the shareholder must practice forestry as a shareholder in the estate or consortium before the transfer. At a minimum, this means one tax year, that is, one tax return must be filed. 

Sale of the estate to a third party 

If, in an undivided estate, no shareholder has a genuine interest in forestry, it is worth seriously considering the sale of the forest to a third party. Forests have been in very good demand in recent years, and as a result, purchase prices have risen to a fairly high level from the sellers' perspective.  

If the heirs sell the forest or their own share of it before 3-4 years have passed since the death of the original owner, the inheritance tax can be adjusted afterwards to correspond to the sale price of the forest area. This will avoid paying the often much stricter capital gains tax. The inheritance tax adjustment period is three years from the end of the testator's death year.  

If the sale of the forest takes place later than the inheritance tax adjustment period (3-4 years from the death of the person), the forest inheritance tax value or, alternatively, the acquisition cost assumption can be used as the acquisition cost of the forest when calculating capital gains. The acquisition cost assumption is 40% of the sales price for ownerships lasting more than 10 years and 20% for ownerships lasting less than 10 years. If the inheritance tax value is used as the acquisition cost, then the costs arising from the acquisition and sale of the forest property can also be deducted in the calculation. If, on the other hand, the acquisition cost assumption is used as the acquisition cost, these costs cannot be deducted in the calculation. 

The sale of inherited forest may also result in a capital loss. This is especially the case if the inherited forest is first severely felled and then the forest is sold to a third party at a price lower than the inheritance tax value. The same loss can be deducted from all capital gains by the same taxpayer in the year of loss and in the following five years. 

Sale of estate forests to a public entity or as a nature reserve 

If the estate sells the forest to a municipality, association of municipalities or the state, the acquisition cost assumption of 80% can be used in the capital gains tax calculation instead of the actual acquisition cost, regardless of the ownership period. The provision does not apply to a situation where the forest is sold as a commercial forest to Metsähallitus.  

If a property or a parcel of land is sold as a nature reserve (ELY Centre), the sale is completely exempt from capital gains tax. 

Clarification for the legal confirmation of possession of real estate  

The estate may apply for clarification for the legal confirmation of possession of real estate from the National Land Survey. The clarification will open many electronic forest services for the shareholders of the estate (e.g. the Finnish Forest Centre's Metsää service). At the same time, various producers of forest services (buyers of wood, forest management associations, forest service companies) receive information on which persons belong to which estate administration.  

More information