If the right to take firewood is reserved, how does it affect the value of the gift?
The donor can reserve the right to take firewood from the forest to heat a particular building although the ownership of the forest is transferred to the gift recipient. The right to take firewood may be reserved for life or for a limited period.
Reserving the right does not affect the fair market value of the gift but it does have an effect on the value used in gift tax assessment.
If no separate account is given, the average firewood consumption is considered to be
• 10 m3 (solid cubic metres) when the heated building is a detached house
• 25 m3 when the building is a large farmhouse or when several stand-alone buildings are heated.
The firewood is valued at the price assessed for standing birch pulpwood in the most recent Tax Administration guidelines for harmonisation of taxation released before the transfer.
Example of the value of the right to take firewood
Antti is 70, and he donates a forest farm to Sami. Antti reserves the right to take firewood for life to heat his detached house. The firewood consumption is 10 m3. At the time of transfer, the price for standing birch pulpwood stated in the guidelines for harmonisation of taxation is €25/m3.
The value of the right to take firewood is calculated as follows: €25/m3 x 10 m3 x 7 = €1,750.
Note: Had Antti reserved the right to take firewood for a limited period, the coefficients for limited right of possession would have been used in the calculation.
Further information
Coefficients for life and for a limited period on web page Right of possession (section Value of right of possession in gift taxation)
Varojen arvostamisen yleiset periaatteet perintö- ja lahjaverotuksessa (detailed guidance, available in Finnish and Swedish, link to Finnish)
Maatilan arvostaminen perintö- ja lahjaverotuksessa (detailed guidance, available in Finnish and Swedish, link to Finnish)
Verohallinnon yhtenäistämisohjeet (detailed guidance, available in Finnish and Swedish, link to Finnish)