If you anticipate selling your orchard, farm or ranch; now or in the near future, you may want to consider selling it as a section 1031 exchange. A 1031 exchange allows you to sell your property without paying tax on the sale and invest the proceeds into real estate of your choosing. 1031 Exchange Place handles all the paperwork and makes sure the exchange is done according to government guidelines.
If you don’t set up a section 1031 exchange before you sell your land, you will have to pay the federal and state taxes (20%-30%) on the difference between the cost of your land and the sales prices. For example if you live in Kansas and purchased 20 acres of land for $10,000/acre and sold it to a home builder for $100,000/acre, you would pay approximately $520,000 in taxes.
|Without a 1031 Exchange||With a 1031 Exchange|
|Cost of Land:||$200,000||$200,000|
|Invested at 5% (before tax):||$64,000/year||$90,000/year|
With the proceeds from the sell of your land, you may purchase any type of investment real estate. You can reinvest in other land, an office building, apartments, an industrial building, storage units, rental homes, a retail center, etc.
We find that most sellers of farm or ranch land want to reinvest into property that produces a secure monthly income without management and operating expenses or headaches. Net-lease retail properties leased by national tenants does just that. You can take the proceeds from your land sale and acquire a Walgreens, AutoZone, Family Dollar, or O’Reilly Auto, etc. You could own a property or properties with a billion dollar net-worth company as your tenant. You can even invest in a property leased to the federal government.
These net-lease properties would have a long-term lease already in place with the tenant paying the property tax, insurance premium, utilities, repairs and maintenance, with no responsibilities on your part. You have worked hard enough to get to this point, so spend your time playing with grandkids, vacationing, providing church or community service, while receiving rent checks directly deposited into your checking account.
Give us a call for examples of prices, locations, and yields.