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Ranch Marketing Blog

Taxes and Selling Your Ranch or Sporting Property

One of the first things an owner should consider when looking to sell their ranch or sporting property, is the tax consequences, as selling an asset can create a taxable event and the last thing an owner wants is to be hit with a big tax bill if it can be deferred. Therefore the first step would be to contact a CPA or Tax attorney.

 

A CPA or tax attorney can assist in determining potential tax consequences from the sell of the property. In simple terms, this is determined by the length of time the asset has been held and the current value of the asset minus the basis in the property. Basis is the value of the asset when it was acquired. It is very possible that the taxes due would be minimal if the basis is close to the current value of the property.

 

For example, maybe the owner recently inherited the property in which case they receive a step up in basis to the value of the property at the time it was inherited. Since the sale price and the new basis are very close, the taxable amount (sale price – basis) is small and therefore most likely the tax owed would be minimal.

But let’s say the owner inherited the property 50 years ago and the value of the property has appreciated dramatically. In this case, the taxable amount would be considerable and the owner could be facing a sizable tax bill. So what can an owner do?

Selby Ranch California Yuba County Browns Valley

One of the most common tools is the 1031 Tax Deferred Exchange so called because it is outlined in the Internal Revenue Tax Code, Section 1031. Notice it says “deferred” and not avoidance. This is because a 1031 exchange simply allows the owner to defer paying taxes to some time later in the future by purchasing a replacement like kind property.

 

In the simplest terms, a 1031 must follow certain guidelines. These rules are the very basic guidelines and an owner should always consult with tax and legal professionals prior to the sale of large assets.

  1. Replacement property must be like kind
  2. Replacement property must be identified within 45 days after closing on the relinquished property (there are rules for identification of replacement property – consult with  legal counsel and/or a Qualified Intermediary)
  3. Replacement property closing must occur within 180 days of closing of relinquished property (this time can be shortened depending on  tax filing deadline)

In addition, the relinquished property must have been held for investment. Therefore a primary residence would not qualify for a 1031 exchange.

 

This raises a very common scenario in regards to family ranches. The family owns the ranch and also uses the ranch home as its primary residence. Can you do a 1031 exchange? In short, yes however it must be done in such a way so that the sale is essentially split into 2 transactions. 1 being the home and the other being the ranch land and operating assets such as barns, corrals, etc. This would allow the owners to 1031 exchange the ranch land and operating assets as well as exclude the value of the home under Section 121 so long as:

  1. The home has been used as the primary residence for 2 of the last 5 years.
  2. The exclusion has not been used in previous 2 years.

And the exclusion is limited to $250,000 if single or married filing separately or $500,000 if filing jointly.

 

There are many tools and procedures to help reduce or defer tax liabilities and 1031 exchanges is one of the more commonly used tools in regards to selling ranches. There are very creative ways to legally conduct a 1031 exchange and this article only touches on the very basics.

 

Always consult with your tax and legal professionals and do not wait until the day of closing or worse the day after closing. If you would like additional information on 1031 Exchanges feel free to contact John Hayter.

About author:  John Hayter is a licensed broker representing buyers and sellers of Texas ranches, Colorado ranches, and New Mexico ranches for sale.

John Hayter

970-389-3010

[email protected]

 

**disclaimer – This is not to be consider legal advice and is for informational purposes only. Always consult tax and /or legal professionals for real estate legal and financial matters.

Posted in Articles

Texas Waterways – Rivers, Streams, & Dreams

By: John Hayter

For many, owning a ranch in Texas with running water is a dream. But with the fulfillment of that dream, they may be in for some surprises due to Texas water law. Texas water law dates back to Spanish law which carried over when Texas was part of Mexico and all these rights were retained when Texas joined the Union.

When considering landowner and public rights in relation to running water it must first be determined if the river or stream is navigable. One might think that would be an easy distinction simply by looking at whether some form of transportation can be used to move up or down the river or stream. However, that is not the case. In fact, a navigable river or stream doesn’t even have to have water in it.

There are two ways a river or stream can be considered navigable.

  1. By statute
  2. Navigable-in-fact

A stream is navigable by statute if the average width of the river or stream is at least 30 feet from the mouth up. However, the measurement is also not as straightforward as one would think. The measurement does not take into account the water itself but is considered to be the average distance between the “fast” land banks that divides the river or stream from the adjacent land and the defined channel confining the water.

texas creek on ranch

A stream or river is considered to be navigable-in-fact if it can be used for commerce.

Now that we have established what a navigable waterway is under Texas law, let’s consider what impacts that may have on a property owner who owns land adjacent to a navigable waterway. Most landowners primary concerns will be in relation to public access to and down the waterway and trespass. A landowner cannot obstruct a navigable waterway or prevent public access. However, the public does not have the right to cross private property to access a navigable waterway and cannot trespass on adjacent private land.

As a landowner, you want to make sure to understand that for someone to trespass does not simply mean they are on your land without permission. You must first give notice and notice can be given in several ways.

  1. Verbally
  2. In writing
  3. Signage (Private Property, No Trespassing, etc)
  4. Posts with purple paint (Purple paint indicates private property, no trespassing)
  5. Fencing (Designed to hold livestock or keep out intruders)

It is considered trespassing if an individual enters your land after being given notice.

The public most likely also has the right to the limited use of the navigable waterway’s banks for portage and scouting for navigation purposes. Also, the public can use the banks and adjacent property in cases of emergency.

In short, if you are looking to purchase property in Texas with a river or stream you will want to determine if it is a navigable waterway and understand how this may impact your use and enjoyment of your property.

** The above information should not be considered legal advice. Always consult an attorney in matters related to law and/or for legal advice.

Adams, Rusty “Up the Creek, Navigating Public Waterways.” Tierra Grande, Journal of the Real Estate Center at Texas A&M University, January 2018 Volume 25, Number 1 Pages 14-17.

Posted in General Ranch Info

Clutter Kills Closings!

7 Steps to take BEFORE You Market Your Home

You’ve made the big decision to sell your home. Who doesn’t want to get the most for their money? Are you wondering where to begin what seems to be an overwhelming task. Now what? Before you put it on the market, take a pause, a step back, and a closer look.

First things first. Give yourself some time. This could take a while. You’ve devoted years to accumulating your ‘stuff’. It has been there so long, you no longer see it! So, it could take a few days to “get ‘er done”, or a week, or a month. Just take the first step. Read on.

Step 1. Grab your cell phone. Go through your house room by room. Shoot several angles of each room.

Step 2. Sit down. Look at all the photos. What does your eye see? If your rooms aren’t looking magazine-ready (most don’t), what can you do to get closer to a pretty picture?

Step 3. Purge party. Edit for success. Go back to the first room. Start there. De-clutter. All of it. Day by day. If it takes a month, or two or six, do NOT market your home until it looks like Nate Burkus or the Gaines live there.

De-Clutter: definition– that means say good-bye to all the little trinkets, papers, stacks, small decorative “stuff”. All of it. The goal here is to have clean surfaces, neatly made beds, no clothes hanging on treadmills you haven’t touched for years, high school corsages, a million photos, 3rd grade art projects, man cave beer bottle collections, lava lamps, convention tags with your name on them hanging from lanyards on the door knob or sales awards you received 2 jobs ago. You get the (bad) picture!

Anytime and every time you start to say to yourself, “Well, I may use this sometime,” if you haven’t used it in a year, you aren’t going to; just stop. That isn’t happening. So, just give it away! Clothes with price tags you bought “on-sale” and too small because you were doing to “lose weight” need to go into a give-away pile. Same with shoes that are pretty, but they hurt! Same with your husband’s garage tools, old paint cans, broken lamps you’ll never fix, etc. All must go.

Step 4. Clean the kitchen! If you just love that olive oil you bought in Tuscany, great! It goes in the pantry or cabinet, NOT on the counter. Same for spices. If you need to, buy a round spinner for spices and place it into a clean cupboard to get them organized and out of the buyer’s eye-line. Throw away duplicate cooking utensils. And, for heaven sakes, get rid of the lids that match nothing and bottom containers with no lids! If your drawers are stained or tired, buy plastic shelf liner and use it.

Clean, clutter-free surfaces allow the buyer to see the house, not your stuff!

Step 5. Get stuff off the floor! That includes the dog’s bowls, dead or old plants, fake flowers that haven’t been dusted maybe ever, dog toys, kids’ stuff thrown away, donated or hidden! Toys of any kind, no matter how darling they are, are just a distraction. And those never-leave-the-planet Cozy Coupes, small slides and playhouses have to go. Everything that isn’t a chair leg, table leg, carpet or standing lamp on the floor needs to be lifted from its home on the floor. Stacks, baskets, magazines, old books–you can replace by reading all online. Clear the floor so the space looks larger.

Step 6. All together now, one more time! Review and repeat. Just when you think you’ve tossed it all, re-shoot the photos. Room by room, go back and be brutal. Nobody else loves your stuff like you do! Especially the year-round Christmas décor! Second time around, you are going to wonder why you didn’t do this sooner. The house looks bigger and airier, right? It may feel so good you decide not to sell, but if you do, the buyer will likely make a quicker offer for more money. More money is one good reason to crush the clutter. Your bank account is the only place for more clutter. Clutter it with money! This is the payoff for what may have been a painful process. You’ll be glad you took the first step and will find yourself doing the hokey-pokey in that brand spanking clean de-cluttered masterpiece you’ve created.

Step 7. Stop reading this right now and get to it! What are you waiting for? And, please send me a note when you are done or a selfie of you doing the hokey-pokey in your sparkling, clutter-free haven!

Posted in Articles, General Ranch Info

Ranch Marketing Associates Announces New Partnerships

December 2017 – Ranch Marketing Associates co-founder and managing broker Billy Long is thrilled to announce strategic new partnerships that will propel RMA into 2018 after an incredibly strong 2017.

Stepping into the new position of Managing Partner, Cody Ullman brings a strong real estate development and business background. “I couldn’t be happier to join this team at RMA as a managing partner,” says Ullman. “Ranch Marketing Associates has a strong reputation and is a top name in the ranch real estate business. We’re looking forward to rolling up our sleeves and building this company for the next 20 years, working off the incredible foundation Billy and Ron have created.” Prior to joining RMA, Ullman managed a capital portfolio focusing on complex equity and real estate investments and was a partner in a family business conglomerate that encompassed commercial real estate and cattle ranching. Licensed in Colorado and California, Ullman, who lives in Santa Ynez, enjoys big game, upland and waterfowl hunting as well as fly-fishing and golf.

“I’m really proud of the company Billy and I have created,” says co-founder Ron Morris. “RMA is a renowned brand in the ranch real estate world and a top producer. After a stellar 2017, I’m passing on the managerial baton, but enjoying a more relaxed role.”
With offices in Colorado, California and Wyoming, RMA Brokers has added new responsibilities and new brokers in all markets:

  • Christy Belton, top producer, partner and manager of the Steamboat Springs office, is taking a more active role moving forward.
  • Joining the California office, Ann Abernethy Guernsey is already stirring up dust with new listings in Santa Ynez— Rancho Latigo, a stunning recreational ranch; Great Oaks Vineyard and Ranch, a world-class winery; and Bernie Taupin’s renowned equestrian estate Round Valley Ranch. Ann divides her time between Santa Barbara and Aspen and is the host of “Women & Wine,” a quarterly networking forum for outstanding Aspen women.
  • Graham Goodfield brings a wealth of contacts and resources. A sixth-generation Santa Barbara resident, his ranching family has worked the central coast of California for decades. Graham owns Los Padres Outfitters, a local outfitter that services the Los Padres National Forest and backcountry lands.

RMA Brokers closed nearly $100 million in business transactions in 2017, most notably with the sales of Wolf Springs Ranch and Inyanga Ranch in Colorado. RMA is licensed in Colorado, Wyoming and California with plans to open offices in Montana in early 2018.

Posted in RMA Brokers

Songwriter and Artist, Bernie Taupin Sells Roundup Valley Ranch

RMA_RoundUp-20

Santa Ynez, CA (July 19, 2017) – Situated on 30-acres of land, Roundup Valley Ranch is a breathtaking ranch estate comprised of a five-bedroom, six-bathroom main house, a separate studio and office space and an equestrian center, complete with a coveted covered arena. Tucked away at the end of Roundup Road in the Santa Ynez Valley, the hacienda is the inspirational home of famed songwriter Bernie Taupin, who is celebrating 50 years of collaborating with Elton John this year. The property is on the market for $4,700,000.

Click to read the full article in the Los Angeles Times.

Posted in General Ranch Info

Idaho Ranches For Sale

Focusing on the beautiful land of the American West, Ranch Marketing Associates has knowledgeable, experienced brokers that can assist you throughout the entire process of your property purchase. No matter what reason you’re looking to buy land, you’ll be able to find some of the most beautiful and luxurious ranches these fine states have to offer.

A scenic mountain state with some of the largest unspoiled natural areas in the nation, featuring abundant resources including outstanding wildlife populations, excellent water supply and diverse soil conditions, Idaho is an attractive state for farm and ranch investors as well as outdoor recreation lovers. Ranch Marketing Associates has unsurpassed industry leadership offering quality ranches for sale in Idaho, working ranches for sale in Idaho, Idaho farmland for sale, cattle ranches for sale, fishing ranches, horse properties, ranchland for sale, and agricultural properties for sale.

Esto Perpetual — Idaho’s state motto — means, “Let it be forever” or “let it endure forever.” And that’s just what the people of this great state are about. The 14th largest state in the nation, Idaho possesses some of the most beautiful, mountain-filled luxury ranches in the entire world.

The “Potato State” did not earn its nickname by not being a great place for agricultural production to occur. The winters in this state are not nearly as harsh as surrounding states due to the fact that Idaho is only 350 miles away from the Pacific Ocean. Despite subsequent high levels of humidity, the amount of precipitation, the moist summers, and the dry winters make for great agro production on any Idaho ranch.

The sheer beauty of this state is nearly unmatchable. Looking out over the mountains and tree lines under an autumn sky in Idaho is perhaps the most magnificent view a person can experience. Although temperatures can regularly exceed 90 degrees Fahrenheit, finding Idaho ranches for sale is great for any prospective rancher or agro producer.

When dealing with any piece of property, it’s important that you consult with experienced brokers you can trust. Ranch Marketing Associates has various offices throughout the Western U.S. and will work with you to find the best investment ranches, production farmlands, and recreational properties for you and your entire family to enjoy.

Visit our RMA Marketing Services to find out more and check out Idaho ranches for sale.

Please see the below assortment of quality Idaho ranches for sale, farmland for sale and investment properties for sale:

Search for All Ranches for Sale

Posted in General Ranch Info

Colorado Town Goes Dark for Milky Way

In many cities across the country, artificial light is making it more difficult to see stars in the night sky. Reporting for Sunday TODAY, NBC’s Harry Smith travels to a small town in Colorado where residents are putting covers on lights in order to take back the night.

See all Colorado Ranches for Sale in the Westcliffe area:

Wolf Springs Ranch
Boyer Ranch
Nags Head West Ranch
Elk Mountain Ranch
Westcliffe Valley Ranch

Click the photo to watch the report:

Colorado Westcliff Ranches Milky Way

View of the Milky Way from Westcliffe, Colorado

Posted in General Ranch Info

Thinking About Beginning Your Career in Agriculture? It’s Time to Buy

Agricultural production has been one of the major backbone industries in the U.S. since the beginning. Even as new technological advancements occur and change the way farming is done, the agriculture industry continues to thrive.

Every few years, it seems like there is a lull in agricultural production across the country and new buyers stop looking for land to purchase. After a few weeks of panic, usually the industry evens out and people start buying farms again. Well it looks like we’re right in the middle of a positive time for the agriculture industry, and it’s shaping up to be a great time to buy farmland across the United States.

colorado farms for sale

Altogether, the U.S. real estate value of farmland amounts to roughly $2 trillion. Depending on where you decide to purchase land, you could easily turn your investment into a profitable career as an agricultural production farmer. There are Colorado farms for sale, cattle ranches for sale in Texas, equestrian property for sale in Wyoming, hunting land for sale in Montana, and hundreds of thousands of acres of beautiful, American agricultural land all over the country.

According to The Guardian, one of the main reasons for the success of the U.S. ag industry is the investment from both domestic and foreign investors.

“If we are going to be a $100 billion industry, which we think we can, we need a range of further investments, domestic and foreign, that will allow us to be more globally competitive,” said Tony Mahar, chief executive of the Nationals Farmers’ Federation.

High quality U.S. farmland is going for less money than it used to and, although farmers are nervous again, there is always the chance of a industry-wide bounce back that will result in farmers making a large profit on their that they purchased for cheap.

Those Colorado farms for sale that you’ve been eying for a while now, if you don’t hurry they could go to someone else. If you’re serious about the ag industry and you want a nature-friendly place for your family to reside, don’t let the opportunity pass you by.

If you want to begin your career as an agricultural farmer, it’s time to buy. Contact RMA brokers to check out Colorado farms for sale, Texas ranches, hunting land on the West Coast, and any other piece of beautiful property.

Posted in Articles

Ranching Couple Hosts a Holistic Management Workshop

Before buying a ranch, it’s good to experience what you’re getting into firsthand. That’s why two ranchers in northern California are planning to host a Holistic Management Workshop on September 3 at their ranch in Likely, CA. Ross and Kelly McGarva, who have practiced Holistic Management for 14 years, are partnering with Spencer and Abbey Smith of the Jefferson Center for Holistic Management to teach attendees proper holistic practices after buying a ranch.

Many farmers and ranchers around the country are often more traditional, Northern California has always catered to the descendants of the Flower Children movement. So while most ranchers were raised in the industry and need no introduction, there are newcomers to the industry looking for help after buying a ranch in California.

Since the McGarvas have converted 3,000 acres of property that used to be used for cattle into a certified organic practice, they have doubled their carrying capacity on 2,500 of those acres. The property used to support 1,000 mother cows, but now holds a total of 3,500 cattle as well as goats.

The United States has always been well-suited for agriculture, which occurs in all 50 states. In 2011, U.S. agriculture had a gross output of $374 billion, thanks to strong farms and ranches nationwide.

california farms for sale add to ag gross output

According to the Jefferson Center website, the holistic workshop will focus on the following practices:

 

    • Increasing forage production through better management practices

 

    • Learning how to “read the land”

 

    • How to enhance ecosystem function and build more drought-tolerant soil

 

    • And finally, “Planning for profit (and peace of mind) in a ranching or farming enterprise”

Their goal is to highlight the benefits of organically sustained cattle ranches. From their own experiences, this management system has resulted in greater plant diversity, reductions in invasive weeds, more conceptions, less water use, drastic reduction in mosquitoes, and more. Spencer Smith, who is a field professional accredited by the Savory Institute, will be teaching the session.

Of course, there are many different types of ranches, not just organically sustained ones. Most ranches and farmland are located in the western states, like California, Wyoming, Montana, Colorado, and Texas, and the latter is home to the most farm real estate in the country.

If you are looking forward to buying a ranch but have never owned one before, there are plenty of resources to help you with the process. At RMA Brokers, we are able to not only help you find the perfect ranch real estate to purchase, but as ranchers ourselves, we can help you implement programs to help your property flourish.

Posted in Articles, General Ranch Info