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.

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!

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.

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.

Thinking About Buying a Farm? 5 Investment Benefits Associated With Farmland

farms for sale

There are more than 2.2 million farms in the United States, with the average farm encompassing approximately 435 acres. Farms are fantastic from an agricultural point of view, of course, but what about investment-wise?

If you’re looking into farms for sale, there are a handful of investment benefits that come with the territory as well. Here are a few of those benefits to consider while you think on buying farmland.

High Capital, Low Risk
Historically, data shows that farmland has maintained very strong capital protection characteristics over an extended period of time. Unlike other rapidly depleting resources, like mining, oil, or gas, well managed farmland is a fully renewable resource which remains productive for an indefinite amount of time.

Plus, the more the population grows, the higher in demand fertile farms for sale become.

Stable, Income Producing Asset
Unlike popular inflationary hedges like precious metals, any farm for sale that you choose to invest in will provide steady income. Farmland real estate offers investors reliable rates of income that are usually above 5% annually.

Performs Well in Market Turmoil
Historically, farmland has proven its worth time and time again in periods of market turmoil. The potential of farmland to perform well during periods of recession is particularly attractive to investors concerned about the sustainability of the global economy.

Direct Investment is Fairly Transparent
In a seemingly unending era of bankruptcies, accounting irregularities, corporate fraud, and other complex scams, investing in farmland for sale is actually quite simple. In fact, the concept of ownership of renewable resource real estate has been quite appealing to countless investors.

Provides Tax Planning Opportunities
Unlike other forms of land investment, farms for sale are associated with a specific range of tax incentives. These include income, capital, and inheritance tax breaks. In addition, this can enhance net returns for investors.

In addition to these benefits, there are countless others, not to mention the incredible amount of farmland available in the United States today. There are nearly 920 million acres of farmland across the country, but only about one-third is independently operated by full owners.

These simple and profitable investment opportunities are just waiting to be acted on, and farmland may just be one of the best bets in today’s market.

If you want to learn more about farmland real estate, contact RMA Brokers for more information.

Farming of the Future: How Drones are Changing the Agricultural Business as We Know It

When you say the word “drone,” many people mistakenly believe this technology of the future is only utilized by highly technologically advanced companies. Just think of Amazon’s futuristic drone delivery robots. But in reality, drones are emerging as an incredibly helpful technology for many different industries.

And this definitely includes the agricultural sector. Drones are being used for a variety of purposes on farmland and cattle ranches, and considering the fact that U.S. agricultural production occurs in every state — amounting to 2.2 million farms nationwide — this can change the sphere of agricultural businesses for the better.

Here are three ways this technology can be beneficial for farmers and ranchers all over the country.

average farm is 435 acres

1. Soil and field analysis

Drones can be especially helpful for the beginning of the crop cycle, as they can let the farmer know the state of the soil before the crops are planted. They are able to produce precise 3-D maps for early analysis, which will be useful for figuring out seed planting patterns.

2. Planting

Already, scientists are experimenting with seed planting agriculture drones.

The average farm is around 435 acres, so using this affordable aerial technology will be able to help save farmers up to 85% in planting costs. The drones will do all the work for you! They will shoot the seedlings into the ground and proper nutrients into the soil. Future farmers won’t have to spend thousands of dollars hiring temporary laborers. With the money saved, family farmers can invest in additional farmland real estate to expand their field.

3. Irrigation

Since their fields are so vast, it can be hard for a farmer to keep an eye on their farmland’s soil quality. So drones that have hyperspectral, multispectral, or thermal sensors will be able to identify what parts of the field are dry and need extra care.

Additionally, drones are able to calculate the vegetation index of the crops once they start to sprout. This describes the relative density and health of each crop, down to each individual plant. This technology can also capture the heat signature, which is the amount of heat the crop emits. Both of these factors are crucial to overall prosperity of the plants, and with early aerial detection, drones could help farmers prevent a bad harvest.

It’s incredible what drones can already do for farmland cultivation. These are just a few of the benefits for ranchers and agriculture scientists. For those with large amounts of farmland on their hands, drones help keep a watchful eye on the fields.

In just a few more years, even more exciting uses are sure to be discovered for agriculture drones.

See some great footage of ranches and farms for sales shot with drones.

Thinking About Buying Ag Property? Here Are 3 Reasons Why You Should

There is agricultural property all over the United States, and with investors looking for new places to store their money, these ranches and farms for sale are getting a closer look. Whether you prefer ranch land to raise and graze livestock, or one of the more than 2.2 million farms in the U.S. that produce other crops, ag land is a wonderful long-term investment.

2.2 Million Farms in America

Not everyone is cut out for farm life. Some people really do prefer the office job and lonely cubicle, annoying coworkers, no windows and a horrible boss breathing down their neck. Some people, however, prefer the change of pace that comes from investing in ag property.

You can find ranches and farms for sale in all 50 states, but before you do, it’s important to understand why so many people are leaving city life behind.

Be Your Own Boss

Combined, ag real estate in the U.S. amounts to more than $2 trillion, so you could say that it’s a lucrative industry. If you really put in the effort and do it right, you can make a very healthy living as an ag producer.

And what’s better than being your own boss? You get to dictate exactly how everything is handled. Maybe you actually do have another career that you enjoy, and want to find ranches and farms for sale just as a second career or a summer home for the family, that’s fine, too. It’s entirely up to you to decide how you want to use this ag property. That’s the beauty of being your own boss.

Better Than City Living

If you’re on the fence about finding ranches and farms for sale, spend some time away from the city and discover why people are happier out in the country. Some people enjoy the constant sounds of chaos in urban settings, but farmers and ranchers like a little more peace and quiet.

Whether you’re living on beautiful California farmland or cattle ranches in Texas, the ag lifestyle can be much more fulfilling than living in a NYC loft. It’ll just be you, your livestock, your family, the stars and all the other peaceful sounds of nature.

Great Place to Raise a Family

The family benefits of living on ag property are well worth it. Even if it’s just a hunting ranch to visit in the summers, your children, nieces and nephews, grandchildren and anyone else that comes and visits will surely make memories every time they stop by. If it’s just you and the family living on the property — even better. You’ll be able to teach your kids the meaning of a hard day’s work. They’ll learn valuable life lessons than many adults never even come close to learning.

 

Click here to see farms and ranches for sale.

U.S. Ag Photographer Wins International Photography Competition For the First Time Since 2004

This summer, a Montana photographer won an international photography competition with a stunning photograph that might just be the most American thing you see all summer. The photograph perfectly captures the stunning beauty of large Montana ranches and recalls a simpler period of American history.

Agricultural production occurs in all 50 states and has been a part of this great country since its founding. Owning ag land in the U.S. can be a wonderful investment too, as the combined agricultural real estate value in this country amounts to approximately $2 trillion. And when you work in agriculture real estate, it can be easy to become desensitized to the raw beauty of America’s farmlands. Almost.

US agriculture Production

According to KBZK, Todd Klassy, of Harve, Montana, won the top prize this month in an international photography contest. Klassy was awarded the Star Prize for Agriculture Photography thanks to his pictures of large Montana ranches. The competition has been held every year for more than two decades, and the last time a photographer from the U.S. took home first place was in 2004.

“I am elated. I couldn’t be happier,” Klassy said. “When you make a career for yourself as a farm and ranch photographer this is a pinnacle of achievement. I couldn’t be more honored.”

The awarded was given by the International Federation of Agriculture Journalists (IFAJ), which recognizes overall excellence in agro photography from all over the world.

Despite being the victor, Klassy had no idea that he had won anything until the day of the ceremony. A ceremony — held in Bonn, Germany — that he did not even attend.

“They invited me to attend but didn’t tell me I had won anything,” said Klassy. “My little brother got married this weekend in California so I just couldn’t make it.”

Klassy received a strange text from Germany during the ceremony and finally figured out what he had won.

Over the last few months, Klassy’s award-winning photo has been published by major publications including National Geographic and Western Horseman. The mountainous large Montana ranches where Klassy shoots includes some of the most beautiful pieces of agricultural property in existence, as the judges of the competition realized.

While agriculture photography might sound like a small niche, the growing market for farm real estate, including Montana cattle ranches for sale, creates plenty of work for photographers. Whether you’re looking to photograph large Montana ranches, settle down on California farmland, or invest in cattle ranches in Texas (which is the number one state in terms of ag real estate value), there are plenty of properties out there for you to discover.

Want to Work in the Ag Industry? Check out These 3 Agriculture-Related Jobs

Despite all the latest technological gadgets and Internet inventions, the agricultural industry is still at the heart of American industry. The combined real estate value of ag land in the U.S. is approximately $2 trillion. In states like Texas — where one in seven workers is in an ag-related field — the agriculture industry contributes more than $36 billion to the state’s economy every year.

If you want to join this wonderful industry, there are cattle ranches for sale and other ranch properties all over the United States. Of course, not everyone can afford to invest in massive ranch properties. Fortunately, there are tons of ways to gain experience in the agriculture industry, no matter how little experience you have. Every year, college students, corporate leaders, and city dwellers decide to join the ag industry.

ag career stats

So if you’re considering investing in ranch properties, or if you want to get real-world experience with a career in agriculture, then here are a few potential agricultural-related jobs you might want to consider:

Ag Engineering — It might require a little more education than some other fields, but this is one of the most important parts of the industry. Especially in this digital world, developing new ways to handle our crops, livestock and property is an exciting new field. If you decide to pursue this career path, you can focus on specific niches within the ag engineering category, including crop engineer, structural engineer, machine design, sanitary handling and bio-processing.

Animal Science — For those of you who got into the ag industry to be around animals in the first place, the animal science field may be perfect for you. Again, more schooling might be needed to pursue this career opportunity, but if you’re serious about doing something you love for a living, this will be well worth it. Many ranch properties and farms also allow people to sign up for a season-long course to get experience up close and personal.

Ag Communications — An important part of any industry, communications makes it possible for people to know what’s going on in the industry. Because this industry is so huge, like any other large industry, you’ll find that a small army of PR people, journalists, reporters, and marketing experts are necessary for the success of the industry. Depending on if you think you’ll like this kind of work, you can become a farm news reporter, an advertising specialist, a sales manager, or even help sell ranch land for sale.

There are ranch properties all over the world that are waiting for you to make your mark. Don’t spend the rest of your life wondering what might have been.