BUYING FORESTS: THE BEST HERITAGE INVESTMENT?

Buying a forest to pick mushrooms or to walk Medor is a rather absurd idea, I grant you.

But wood is also an interesting way to make its money grow.

Investing in a forest is a great way to diversify its heritage.

I’ve already talked about buying farmland. I propose to continue in this vein “to invest in nature”.

The purchase of forest is both a pleasure investment and a patrimonial operation.

On the other hand, if you’re looking for profitability, you’ll want to consider other types of products.

Come on, we’ll take a walk in the dead leaves (it’s seasonal), do not forget your boots!

What are the advantages of buying a forest?

A patrimonial investment

The purchase of a forest for a heritage purpose is an idea to dig. This is a long term investment since most trees take at least 30 years to be exploited – unless you plant Christmas trees </s>.

 

… or a fun investment

You can buy a forest because you are a hunter. Or because you are a nature lover. In the latter case, you will make your recreational ground.

And why not build a tree house. This will remind you of your childhood! If this mode of housing has begun to develop in France in recent years, nothing to do with what the Americans know how to do.

Wood: a promising market

In addition, the purchase of forest is an investment that offers real guarantees: the demand for wood in the world is constantly increasing and the construction of wooden house is always in fashion. However, global demographics have grown significantly in recent years.

World production of wood is 3, 4 billion stereos. In France, 8 million cubic meters are produced each year.

 

The purchase of forest: the most green investment?

Do you know that if abandoned land is left, it will return to its natural state, that of a forest?

It has been forgotten, but our prehistoric ancestors lived essentially in this type of environment. So buying a forest is probably a return to the source.

Without going back so far, remember your biology course in 3rd grade. Yes, I know: not easy. But you had to keep in mind that trees effectively store carbon. We need to reduce our carbon emissions to combat global warming and greenhouse gas emissions.

At the same time, wood-fired heating is an alternative to fuel oil heating, more polluting or to electric heating based on nuclear energy, more risky.

 

The purchase of forests with a view to tax exemption

With respect to income taxation

Revenues from the exploitation of a forest are taxed as income from land.

You have a fixed charge per hectare, whether or not the timber is cut.

That said, there is an income tax reduction equal to 18% of the purchase price retained up to a ceiling of 5,700 euros for a single person and 11,400 euros for a couple that declares its income in common . The purchase must relate to an existing forest or a naked wooded land of not more than four hectares. The counterpart is the commitment to conserve and exploit the forest property for 15 years.

If you are taxed at the ISF (Future Capital Property Tax – IFI)

Well, I know, it only concerns a few people but it’s still good to know.

In this case, you only report one quarter of the value of the property under the TFR, provided that the forest is managed sustainably with a management document approved by the administration.

What about inheritance / donation fees?

The forest has a reduced taxation on transmission: a 75% abatement is applied on the value before the calculation of inheritance or gift taxes. Thus, only a quarter of the value of forest goods is likely to bear taxation in the case of donation or inheritance.

All of these tax benefits have many obligations, including the commitment to exploit the forest estate for 30 years.

And the property tax?

Established by each municipality, this tax is based on forestry cadastral income, which represents the average annual income of the whole production cycle (from 25 years for poplars to 150 years for oaks).

But again, taxation can be (very) softened. Article 1395 of the General Tax Codeprovides for this. Judge it.

Plots sown, planted or replanted in timber shall be entitled, temporarily, to a total exemption from the tax on undeveloped properties. The exemption is:

  • 10 years for poplars

  • 30 years for softwood

  • 50 years for hardwoods

Finally, how are the capital gains taxed?

As the average price per hectare of forest is increasing year by year, you will no doubt realize an added value on the day you separate from the property.

The tax on capital gains is modeled on that of immovable properties , ie 34.5% (to date …).

The same system of abatement exists.

On resale, any capital gains are therefore exempt from tax after 22 years for income tax and 30 years for social security contributions.

How to buy a forest?

So here you are looking for a piece of forest to sell. And this is not the easiest investment to find. Indeed, forests are often transmitted from generation to generation and remain within the same family. Each year, the equivalent of 1% of the French forest is put up for sale.

First of all, there is the price, but it is so obvious that I will not go into the subject.

Just know that it varies greatly from one region to another depending on the wood species, the wood stock or the accessibility of the land. To give you a price range, this ranges from 410 € to more than 65 000 € per hectare.

Stay Motivated! Several options are available:

– go through a private individual.

– opt for an agency specializing in this type of transaction. For example, this type of society allows you to estimate the population of a forest.

– bet on the sale of a state forest. I have already spoken of state-owned sales in this article. You will find all the subtleties of this type of sale.

– submit an application to the SAFER.

For those of you who prefer to delegate, you can buy shares of forest land groupings . This system is a bit like the SCPI. You can therefore enter the capital of this company, which owns many parcels that it operates, which will ensure a yield generally around 2%.

Advantages: more management concern and reduced risk of loss since the forest land grouping is diversified on several massifs.

 

What is the return on buying a forest?

There are many sources of income. We first think of the exploitation of wood. But, do not forget that, in return, it will be necessary to replant!

If you feel the soul of a cabinetmaker, you can also transform your own wood and resell it in objects or furniture.

There is also the sale of ancillary products that you do not necessarily think: fruits, barks, resins …

Another option to make your business profitable: rent your land for hunting.

Well, in the end, the profitability will not be explosive: about 1 to 3%. But there is no major interest in buying a forest.

On the other hand, if you retain ownership long enough and you enrich it in terms of density or species of wood, you can make a nice added value to the resale. Look at price trends over the last 20 years in the table earlier in this article. It is up by 3.2% on average.

Also be aware that this is an illiquid investment. If you have to sell your forest quickly, there are risks that it should be sacrificed in terms of price.

 

And why not plant a forest?

The price of a forest already constituted is considerably higher than that of simple agricultural land, why not buy a piece of land to plant your own forest?

Well, I know, the idea may sound a bit crazy, but think you can create your own forest with the wood species you prefer.

It will then be necessary to choose a relatively flat and accessible ground with good quality soil: avoid the rocky terrain!

But you will see that it is possible to push the reasoning even further …

Or the forest garden, it works in both directions 🙂.

So, what is this story again?

It is actually creating an edible forest . Miam miam. I found this concept created by the British Robert HART really interesting (and not just because I’m greedy).

In this case, you must be inspired by natural forests while “accompanying” the movement. Let me explain.

It is a multi-tiered crop: you first plant large trees (fruit trees or nut trees, typically walnut), then shrubs or shrubs (small fruit trees), bushes (berries such as raspberries or gooseberries or aromatic) and herbaceous plants (perennial vegetables, aromatic plants …). In summary, instead of working horizontally, you garden vertically. And you can also grow vines or kiwis in the middle of it all.

Know that the thing is possible with only a few hundred square meters. Enough to ensure you quality food.

If you see bigger, you can dedicate – in addition – part of your plot to firewood. Know that it takes about 1 hectare of forest to generate 10 streams of firewood per year. It’s up to you to make your calculations to be autonomous!

 

So, is buying forest made for you?

You will understand that the purchase of forest is either a pleasure investment or a heritage investment or both!

It is practiced in the long term: you will therefore benefit rather for your old days. And, above all, it is your children who will say thank you 🙂.

Personally, I will see myself planting a forest of less than 4 hectares to benefit from the reduction of income tax and exemption from property tax. One part would be dedicated to the forest garden, the other to the firewood.

To do this, you would have to find a piece of land close to my house (15 km in the area). This would require a great effort initially to plant the trees. But after that, as it grows on its own, I will only have to take a little time to harvest and enjoy!

Be the first to comment

Leave a Reply

Your email address will not be published.


*