Selling Your Farm or Ranch

Owning real estate in certain types of entities (i.e., partnership, LLC, S Corp, C Corp, etc.) can present challenges when the property is sold, particularly if different parties have different reinvestment goals. Solutions do exist, but some require advance action.

Selling a farm or ranch often involves disposing of business property, such as land and outbuildings, as well as non-business property like a home. Although the land and outbuildings can be exchanged in a 1031 exchange, the home cannot. But there is a way to exclude from taxes up to $500,000 of gain on the sale of your home.

Ag properties that have been aggregated over generations are often composed of multiple separately deeded parcels. If you plan to perform a 1031 exchange with some of the sale proceeds and to take some of the proceeds in cash, cost basis planning is a simple and wise strategy for doing so cost-effectively.

The 1031 exchange is one of the most powerful wealth-building strategies available for folks selling highly appreciated real estate. To reap the benefits, strict requirements must be followed.

Before considering any investment options, you should first determine your income needs and risk tolerance. Typically, our clients desire a secure investment more than high returns. If you want long-term, steady income with little or no management responsibilities, high quality commercial real estate may be an excellent option to consider.