How a 1031 Exchange can help take your farmland and turn it into your family’s legacy
Does this situation sound familiar to you?
You (or someone you know) have accumulated many acres of land and you’re either working the land yourself or leasing it out. As you’ve gotten older, this undertaking is simply becoming too much and/or the family’s next generation has different dreams for themselves.
If it does, a 1031 Exchange could be the answer.
In the situation outlined above, the land owner has some options:
Through a 1031 Exchange, they are allowed to invest in many other types of investment property. Under the like-kind requirements for 1031 Exchanges, as long as the taxpayer sells and purchases real property “held for productive use in a trade or business, or for investment”, it qualifies for 1031 Exchange treatment. This allows the taxpayer to sell the farmland and purchase other types of investments.
We’re seeing our 1031 clients selling farmland to purchase other income producing property, like multi-family properties or even buying into Delaware Statutory Trusts (⬅️click the link to learn more).
For taxpayers who are strategizing about an inheritance plan for their children and/or grandchildren, we’ve seen clients leveraging their farmland for multiple properties which can be left individually to the heirs.
Taxpayers are not limited to only owning farmland through the 1031 process, and we are here to help change that way of thinking. Leveraging and expanding their portfolio through a 1031 Exchange can help increase income and continue their family’s investment legacy.
For more information or if you have other questions, please contact the specialists here at Security 1st Exchange for assistance.