For agricultural and forestry land, a distinct statutory valuation method applies: the liquidation value pursuant to Section 166 of the German Valuation Act (BewG). But what happens if the purchase price actually achieved shortly after the inheritance falls significantly below this value? In its ruling of 30 January 2019 (Case No. II R 9/16) the Federal Fiscal Court (BFH) decided this issue as a matter of principle: a purchase price achieved close in time to the valuation date can override the statutory estimated value – if the deviation exceeds what is constitutionally permissible.

The case

An heir sold two inherited arable plots approximately six months after the inheritance in the ordinary course of business for a total of EUR 123,840. The tax office had previously valued the same plots under the statutory liquidation value method at EUR 191,952 – roughly one and a half times the price actually achieved. The heir challenged this approach, relying on the timely purchase price as evidence of the lower fair market value.

The decision

The Federal Fiscal Court (BFH) ruled in favor of the heir and set the property value for tax purposes at EUR 123,840. The decisive factor was the constitutional prohibition of excessiveness: if a standardized statutory valuation method leads, in an individual case, to a result exceeding 1.5 times the actually achievable market value, the standardization exceeds the limits of what is constitutionally permissible.

The court thereby confirmed: the ability to prove a lower fair market value is not limited to developed properties or to cases under Section 198 of the German Valuation Act (BewG) Even in the case of agricultural and forestry land, a purchase price achieved close in time can override the statutory estimated value – provided it is substantially lower and was achieved in the ordinary course of business.

What this means for heirs and property owners

The ruling is an important signal: standardized valuation methods under the German Valuation Act (BewG) are not untouchable fixed values. They can run up against constitutional limits when the deviation from the actual market value becomes too great. In this context, proof does not necessarily have to be provided by way of an expert appraisal report – a timely purchase price achieved in the ordinary course of business may be sufficient.

Two conditions are decisive here:

• The sale must have taken place close in time to the valuation date have taken place
• It must have been achieved in the ordinary course of business , i.e. without special terms or personal relationships between buyer and seller

If no timely sale has occurred, or if the property in question is not agricultural or forestry land, the only remaining route is via Section 198 of the German Valuation Act (BewG) – i.e. a qualified expert appraisal report.

Conclusion

BFH II R 9/16 shows that even statutorily defined valuation methods are not immune from constitutional scrutiny. Anyone who inherits property and shortly thereafter sells it at a price significantly below the tax valuation has strong arguments for demonstrating the lower value. The hurdle: the deviation must be substantial, and the sale must reflect genuine market conditions.