Sell Relinquished Property
Section 1031 of the Internal Revenue Code (IRC) allows you to sell your agricultural land and defer the payment of capital gains taxes that may arise from any appreciation on your property.
By using the proceeds of your property sale to purchase “like-kind” real estate, you potentially can reinvest in property types that may offer greater appreciation, portfolio diversification and potential income. That is one of many reasons 1031 Exchanges are becoming increasingly popular among farmers and ranchers who are considering selling their land.
Like-kind property does not just mean replacing agricultural land with agricultural land, while certainly an option. Examples of like-kind properties which can be reinvested in include:
ANY real estate held for productive use in a trade or business or investment purposes is considered like-kind. Therefore, the ability to exchange your agricultural land for other types of real property may provide you the opportunity to diversify your investment portfolio and potentially increase your income.
Important Note: It is important to know that when considering the sale of your agricultural land; equipment, livestock, and crops are not exchangeable under IRC Section 1031, although water rights and mineral rights may be exchangeable under certain conditions.
To execute a successful 1031 Exchange transaction, there are specific guidelines that must be followed. You will need to identify a replacement property within 45 days of the sale of your relinquished property, with the entire 1031 Exchange timeline being no longer than 180 days from the sale of your relinquished property.
Sell Relinquished Property
Identify Replacement Property
Acquire Replacement Property
While there are several requirements governing a 1031 Exchange, you will generally follow a simple, three step process:
Selling your family farm is big decision. Many farms have been part of a family's history for generations and letting go of the property has sentimental and financial implications. We compiled a checklist of our top tips to help farmers and ranchers, like you, navigate this new territory. It may be possible to defer taxes by reinvesting the proceeds in a like-kind investment.
Real estate investments have the potential to help generate retirement income and build long-term wealth to pass on to heirs.
A Section 1031 exchange can help you transition to another real estate investment while deferring capital gains taxes.
If you’re ready for a less stressful form of real estate ownership, consider a passive strategy.
This website is neither an offer to sell nor a solicitation of an offer to buy any security which can be made only by an offering memorandum, and sold only by broker dealers and registered investment advisors authorized to do so.
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