Problems with the Income Value Basis in Agricultural Lands Subject to Inheritance

• Published in: İstanbul hukuk mecmuası (Online) Vol. 81; no. 4; pp. 911 - 941
• Main Author: Sümeyye Tuba Korkusuz
• Format: Journal Article
• Language: English
• Published: Istanbul University Press 01.12.2023
• Subjects: actual value; capitalization interest rate; competent heir; fair value; income method; income-based value; keywords agricultural land; market value
• ISSN: 2667-6974
• DOI: 10.26650/mecmua.2023.81.4.0003

Agreement among heirs is essential when divvying up inherited agricultural lands. If the heirs cannot agree, the problem is resolved through litigation. In accordance with Article 657/II of Turkish Civil Code No. 4721 and Article 8/C of Law No. 5403 on Soil Conservation and Land Use, a judge must allocate agricultural lands to competent heirs based on the income value. The provision on the definition of the income value of agricultural lands in the Regulation on the Transfer of Ownership of Agricultural Land was amended at the end of 2021. Although the regulation contains many new provisions, especially regarding the use of the income capitalization method to calculate the value, the adoption of this method is accompanied by many problems. This is because using the income capitalization method provides a value for agricultural lands that is considerably lower than the market (i.e., real/fair market) value, especially due to the current high inflation in Türkiye. Meanwhile, agricultural land is quite commonly undervalued due to inaccurately determining the average annual net income and capitalization interest rates. The predominant view in the doctrine is that the acceptance of the income-based value instead of the actual value leads to a violation of interest for the heirs other than the heir to whom the agricultural lands are dedicated. In addition, the competent heir to whom the agricultural land is allocated based on the estimate potential income value can make a profit by disposing of the agricultural land. This study aims to identify the problems arising from the allocation of agricultural lands subject to inheritance based on value obtained using the income capitalization method. The study aims to ensure a balance among heirs when divvying up agricultural lands. In this context, the study present solutions to the discussed problems.