- Real Estate
- Entreprises
Taxation of Agricultural Land
Note: This language version is an automatically generated translation. The text may therefore contain linguistic and terminological errors.
view in original language (German)Note: This language version is an automatically generated translation. The text may therefore contain linguistic and terminological errors.
view in original language (German)The transfer of agricultural land raises complex tax law issues: Is the property considered business or personal assets? Is it agricultural land as defined in Art. 18(4) of the Federal Income Tax Act (DBG)? What are the tax implications of transferring a farm at its income value, selling it to a third party, or selling building land? These questions are addressed in a practical manner using four case studies.
Mr. Schwab operates a farm as a self-employed individual with a workforce equivalent to 2.2 standard labor units. The real estate is part of the business assets. His 26-year-old daughter, Sandra, who has successfully completed her agricultural training, intends to take over the farm as of January 1, 2027.
Book value of the farm: TCHF 900‘ (excluding inventory)
Capital costs of the farm: TCHF 1,600 (real estate and land)
Income value of the business: TCHF 950‘
Increase in assessed value under Art. 18 BGBB: TCHF 30‘
Market value of the farm: TCHF 2'400' (buildings and land)
Mr. Schwab operates an agricultural business as a self-employed individual with a workforce equivalent to 2.2 standard labor units. The real estate is part of his business assets. His only daughter, Sandra, does not intend to take over the business. There are no other legal heirs who could assert a right of first refusal under the Swiss Civil Code (BGBB).
Kurt, the neighbor’s son, has spent much of his free time on the Schwab family farm since childhood and has always shown a keen interest in agriculture. He has successfully completed his agricultural training and hopes to run his own farm. Against this backdrop, the Schwab family intends to sell the farm to Kurt.
Book value of the farm: TCHF 900‘ (excluding inventory)
Capital costs of the farm: TCHF 1,600 (real estate and land)
Income value of the farm: TCHF 950’
Increase in assessed value under Art. 18 BGBB: TCHF 30'
Market value of the business: TCHF 2,400 (real estate and land)
2.2 Questions
In addition to his farm, Mr. Schwab owns an undeveloped parcel of land in a building zone that is not being sold together with the farm.
The buyer of the building lot is Mr. Klaus, who is not related to the Schwab family. The agreed-upon purchase price for the 1,000 m² is CHF 1 million, which corresponds to the market value.
The plot is part of Mr. Schwab’s business assets and was separated from the agricultural operation.
Pursuant to Art. 5 of the Spatial Planning Act (RPG), the canton levies a 20% capital gains tax to appropriately compensate for significant planning advantages.
The maximum possible agricultural market value amounts to CHF 8
per m².
Book value of building lot: CHF 2,500
Construction costs for the building lot: CHF 2,500
Market value of building lot: CHF 1,000,000
What are the tax implications for Mr. Schwab?
Farmer Meier (born in 1940) owns a farm in the canton of Zurich and ceases agricultural operations in 2006 due to a lack of a successor. He leases out the cultivated land, with the exception of the cherry and fruit trees. The farm parcel, which includes a residence and a barn and is located in the village (building zone), is occupied by Mr. and Mrs. Meier themselves. Farmer Meier continues to operate a small farm stand and sells cherries, fruit, and firewood from his own forest. The farm’s properties continue to be taxed at their income value.
Starting in 2016, the Meier family began estate planning. One of their three daughters is willing to take over the farm property, including the house and barn, and live there herself. Mr. and Mrs. Meier have retained a real estate firm (trust services, appraisals, management) to handle the transaction, i.e., to appraise the property, provide tax advice, and draft a deed of conveyance and an inheritance agreement. In doing so, they instruct the real estate firm to ensure that the transfer is tax-neutral and that a fair arrangement is reached within the family.
The real estate firm values the farm parcel at CHF 1,800,000.
