In so-called real estate transactions, one has to pay all sorts of ancillary costs to satisfy the registrar and the tax authorities.
The forest deduction (Metsävähennys) for a forest buyer is rising to up to 75%, i.e., if there is wood for sale on the purchased property, then from the timber sales income, one gets capital returns of approximately 1/3 compared to the normal tax rate.
This is quite right, as the value of a forest is almost solely the value of its timber stock; from the owner’s perspective, it’s a balance sheet transfer from standing timber to cash.
Payments for the buyer
In addition to the purchase price, the buyer pays the official witness of sale’s fee of 138 euros, transfer tax of 3% of the purchase price, the application for title registration fee of 172 euros, and subdivision costs according to the National Land Survey of Finland’s tariffs. In a possible electronic real estate transaction, the buyer pays the National Land Survey of Finland’s electronic real estate transaction service fee of 236 euros.
A few years ago, somewhat unexpectedly, my brother and I received the family’s forests. My mother was granted a lifelong right of usufruct to reduce the gift tax.
As I understand it, we should establish a forest partnership? Is this still mandatory if there are no expenses or income for a few years. Can you recommend some resources (website, book, etc.) that a new forest owner like me should look into
I can’t recommend books. I started as a novice, and right at the beginning, I had long conversations with an expert from the local Forestry Association. The most significant single decision was the style of implementing the generational change, but for you, that stage seems to be over already. At the same time, we went through the basic lifecycle of forest management, and I got to ask silly questions. It’s advisable to establish a forest partnership; I don’t know if it’s immediately mandatory, but sooner or later, it will be necessary anyway.
As for forest management, it feels like different styles are almost matters of faith among forest owners. Some swear by continuous selective thinning, and others prefer clearcutting. Some leave seed trees, and others plant seedlings. And of course, those who represent the opposite style are always complete idiots. So, if you talk to another forest owner live or on online forums, it’s always good to take things with a grain of salt.
That forest association was formed for us quite unsolicited, apparently by the tax authorities back then. It’s advisable to visit your own forests with an expert from the local Forest Management Association (MHY). Finland is a long country, and instructions given on the internet may not necessarily apply to your specific forest. Forests grow quite differently in Central Finland and southwards from there than further north. Consider what values you want from your forest; do you want to preserve the forests for recreational use, or do you want to cut everything down to get money for other things.
The Forest Management Association (MHY), mentioned by many, is certainly one of the best tips. If you are generally interested in forestry, the Aarre magazine, aimed at forest owners, has been good. It offers a good balance of entertaining content and information. Another good source of information is metsänhoidonsuositukset.fi, where you can find more detailed information. If you are interested in a truly in-depth study of forest management practices, you should delve into site type theory, which is the primary basis for research-based forest management in Finland.
One option is to attend forest entrepreneur training organized by forest schools. The training here lasted a year, with about 1-2 evenings of school per week. Excluding summers.
This was really beneficial for me. Not only because of the knowledge, but I also gained a good network from which to ask for advice, help, or peer support. This also gave a new forest owner more confidence to work in forest management tasks.
First, you need to consider whether you want to invest in forests at all and manage them yourself? Or sell them off?
If you want to invest in forests, then there are still many options. Joining a common forest, a forest partnership, co-ownership of real estate.
It’s worth remembering that a forest partnership seems to be jointly liable property? There are risks involved.
You can get advice from MTY or the forest services of some forest company. Of course, there are also independent operators. I don’t really consider MHY to be independent either.
For what purpose is a forest association needed if, according to what you said, the right of usufruct is still with your mother?
The holder of the right of usufruct (your mother) is, however, in this arrangement the actual practitioner of forestry and the taxpayer. Below is the Finnish Forest Centre’s summary on the topic.
If the owners/heirs want to start practicing forestry more quickly, the lifelong right of usufruct can, of course, be dissolved with arrangements suitable for the situation.
In this context, it is possible to form a forest association among the owners. It may be advisable to seek expert assistance for the arrangement.
Does anyone have experience investing in Estonian forests? Do the returns, growth, forest management, and regulations differ from Finnish forests? At least the growing season and thermal sum are more abundant than in Finland, and timber prices also seem to be somewhat higher. There isn’t much information available on forest land prices, but based on some sources, it appears to be more affordable than its Finnish counterpart.
I have no experience, but raw timber prices fluctuate much more wildly in the Baltics than in the Nordic countries. The country doesn’t seem to have any significant chemical processing, and the export market determines the prices.
Timber prices were good in 2024. I just calculated the average sales prices from last year’s annual report of the jointly owned forest I partly own:
-Pine sawlog 81 E per m3
-Spruce sawlog 85 E per m3
-Pulpwood (average all species) 32 E per m3
This year, the beginning of the year has seen even higher prices. Forests in Southern Finland
Today I reviewed timber sale offers for one clear-cutting and one first thinning plot. One unnamed company had:
Altered the total timber volumes so that the offer was no longer comparable
Tried to pass off a winter site as a summer site
Reserved the right to determine the storage location later, while the seller was responsible for all road costs, meaning a high risk that the forest road section, which in the logging plan was meant for a forwarder, would have had to be graveled to be suitable for a log truck at the seller’s expense.
The price for pine sawlogs in the clear-cutting was approximately 80 euros, when the final felling (summer) was only about one hectare in size, and an over 5-hectare first thinning area (winter) became an additional burden. For spruce pulpwood in the first thinning, 35 euros were paid. This was in Southern Finland.
The Forest Management Association’s (MHY) own harvesting service won.
Offers are made by the person responsible for wood procurement in the area, so these cannot be generalized as the philosophy of the entire group. What can generally be stated is that offers must be prepared & read carefully, and disputes are less likely with “own” harvesting service versus a giant corporation.
Also, it’s advisable to fix the forest road before making deals; I think the longer-than-usual distance for the forwarder lowered the log price. It’s unclear whether the stands should have been sold separately or not.
Managed to plant thousands of seedlings on one small clearing and as infill in poorly regenerated areas. In addition, brushcutting work on several hectares and firewood work on the side.
This certainly pays off if you had outsourced that work. Of course, fitness stays good, and as a bonus, you don’t have to get anxious at the cottage wondering how to really pass the time
Can you estimate more precisely how much you earned? And I’m definitely not trying to be snarky or anything, but this really interests me. Everyone, of course, values the enjoyment and exercise of forest work in their own way, so it would be pointless to lecture about it from that perspective.
In Finland, the planter’s fee is probably around €0.15 per piece? The contractor probably charges roughly double for this. And the planting speed for professionals is probably around 1500 seedlings, or a hectare per day. In challenging locations, it’s often paid by the hour. But daily earnings would then be €200-300.
There are also various tax reliefs for forest management, and METKA support schemes are available.
For reference, here on the West Coast of Canada, wages are still in a league of their own, depending on whether you work as a “sole proprietor” or for a company. As a private individual, planting fees are $0.20-$0.30/seedling planted, and experienced guys can get about 2000 seedlings into the ground per day, meaning monthly earnings of about $10,000 (€6500) for a 40-hour work week.
A few acquaintances are doing this work during the spring/summer planting season from April to August in British Columbia/Alberta and the autumn planting season in September/October on the East Coast, and with these monthly incomes of $60-80k, they live the rest of the year in South America. It’s hellishly physical work, but if your back, etc., holds up, a young fellow could get a good starting capital to grow with compound interest, as not much money is spent out there in the middle of the forests.
Do the returns, growth, forest management, and regulations differ from Finnish forests? At least the growing season and thermal sum are more abundant than in Finland, and timber prices also seem to be somewhat higher. There isn’t much information available on forest land prices, but based on some sources, it appears to be more affordable than its Finnish counterpart.
