Financial Reasons Owners Sell Farmland Sometimes a seller just wants to realize their gains in asset appreciation or trade land for cash to invest in another opportunity. For example, a landowner may find a desirable property and want to sell out of one piece of land to invest in the new one.

How is farm land valued?

The capitalization of rent valuation model simply reflects the current farmland cash rent divided by the current capitalization rate. For example, if a farmland has cash rent of $300 per acre and the current capitalization rate is 3.5%, the value of the farmland today is $300 divided by 3.5%, or $8,571 per acre.

What should I look for when buying a farm?

“When buying a farm, you need to evaluate its resources: soil, forages, and how they’ve been managed,” explains Morrow. “Taking the topography of the land into account is also important, such as the amount of open pasture vs. wooded acreage. Soil health and fertility are of the utmost importance.”

Is buying farmland a good investment?

Farmland has historically been a good investment. Unfortunately, not many investors have been able to benefit from this asset class, given the high upfront costs of buying farmland.

What’s the best way to sell your farmland?

As harvest concludes, some landowners start to consider selling their farmland. Some will try to sell their land independently. Others will work with a real estate professional specialized in farmland to help make a smooth transaction. The following are tips for sellers whether they hire a real estate professional or sell themselves.

What are the tax rules for selling farmland?

Julie Butler explains the tax rules that apply when selling small parcels of farm land, including when there is potential for investment business such as glamping or weddings

Is it good to sell farmland in public auction?

For high-quality farms, a public auction has been a great way to get maximum exposure and prices for land. However, for farmers looking to recapitalize their balance sheets, a public auction isn’t exactly the message they want to send to the community.

What happens when you sell your farm or ranch?

Section 1031 of the Internal Revenue Code allows for the exchange of property for other “like kind” property without it being recognized as a taxable sale. Thus you can sell your farm or ranch, use the proceeds to purchase other real estate and defer capital gain taxes.