New system to address productive green space issues

Certainly, if productive green spaces are put on the market all at once, a drop in land prices is inevitable.

To mitigate this impact, the government has taken steps to address the issue by introducing new systems.

Specifically, the government aimed to gradually transition from the productive green space system to the new system by establishing a new designated productive green space system in 2017 and establishing related tax systems.

Establishment of the Specified Productive Green Space System

When productive green space is designated as specific productive green space, the designation is lifted and the period for making purchase offers is extended for 10 years, and can be extended further after the 10 years have passed.

During this period, tax benefits for owners, farming obligations, and restrictions on development activities will remain the same as for productive green space.

If an area is not designated as a specific production green space, or is not redesignated after 10 years, it will not be able to be designated as a specific production green space in the future. Therefore, it is likely that the amount of productive green space will gradually decrease, but it can be said that the rate of decrease has been significantly slowed under the new system.

Revision and improvement of tax laws related to productive green spaces

Relevant tax laws have been established so that the preferential tax systems that were applied to productive green spaces can also be applied to specified productive green spaces.

As a result, productive green space farmers will continue to receive reductions in gift tax and inheritance tax as before, and will also be able to receive reductions in fixed asset tax.

In addition, if the area is not designated as a specific productive green space after the expiration of the period, the area will not be eligible for preferential gift tax and inheritance tax treatment. However, in order to mitigate the sudden changes, a measure has been put in place to return the fixed asset tax assessment to the same level as residential land over a five-year period.

Choices faced by productive greenfield farmers

As the 30-year period expires, productive green space farmers will be forced to choose whether to have their land designated as specific productive green space or to allow the period to expire with their land remaining as productive green space.

If the area is designated as specific productive green space, it will be able to continue receiving tax benefits as before, but farming obligations and restrictions on development activities will also remain.

If you maintain the status quo, you will be able to freely develop and sell the land after confirming that your offer to buy it from the government will not be accepted after the period expires.

On the other hand, fixed asset tax will be reverted to the same assessment rate as residential land in five years, and preferential gift and inheritance tax treatment will no longer be available.

Productive green space farmers will need to decide what to do based on their future life plans, health condition, desire to continue farming, and the wishes of their family.

Impact of productive green space issues on land prices

Initially, some real estate agents were worried that many productive green spaces would be put up for sale, but the introduction of new systems such as the Designated Productive Green Space System seems to have eased concerns about a sudden drop in land prices.

However, with current real estate prices at a fairly high level, many property owners are likely thinking about selling now.

In fact, some productive green spaces are being developed into residential areas and single-family homes are being sold. We would like to keep an eye on future developments.

Take your time and think carefully about your countermeasures

There is a considerable amount of farmland designated as productive green space in urban areas, and if it were released onto the market all at once, a drop in land prices would be inevitable.

However, this risk is being reduced through the introduction of the designated productive green space system, among other things.

For those who are planning to buy or sell real estate, this gives them more time to think about the future.

Now is the time to take your time and think carefully about your next move, without rushing into action.