Ranch for Sale – Reduce Tax Burdens with These Tips


Most people regard selling a ranch or any other agricultural land to be an emotional issue. The property may have been in families for generations. They may have many pleasant emotions growing up on it. This is the reason why they may find it difficult to let go. However, the circumstance of such individuals may change. It is possible that they could be under extreme financial difficulties. They find it very hard to make ends meet. On the other hand, others may be looking for better opportunities in urban areas. Whatever their reason, they may have no option but to take this course of action.

Ranch for Sale - Reduce Tax Burdens with These Tips

Why do people need to consider when putting up their ranch for sale

Property experts explain selling a ranch for the right price is never an easy thing to do. People owning such properties need to be aware of the prevailing market conditions. Only then can these individuals make any decision. At the end of the day, they obviously want to get the best deal from the transaction. However, they have got to tackle complex tax issues arising from the transfer of this immovable asset. After all, the liability can significantly reduce the sum of money they finally receive. It can affect their financial position. This the reason why they should consider hiring the services of professionals specializing in this field. They can then suggest the best course of action for them to take.

The professionals state that people selling their ranch can reduce their overall tax burden. For this, they need to remember the following two important tips:

  1. Opting for an exchange under Section 1031 in to reduce or defer the tax liability

People are putting up their ranch for sale generally incur a high tax liability. This is so when there is appreciation in the value of the property they own. The money they receive from the transfer of this property fall under the preview of capital gains. However, they can reduce, defer or eliminate this burden by opting for an exchange under Section 1031. Under this clause, these individual need to invest the proceeds in a similar real estate. However, they need to do so within a specific period.

  1. Disposing of a home along with the ranch

Individuals trying to sell off their ranch need to remember an important fact. At the time of selling the property, they are also getting rid of other assets. These could include their homes, agricultural implements, and livestock. The tax authorities regard the animals and equipment they own as business property. They can opt for ‘Section 1031’ exchange for such assets. However, they cannot do so for their home. In such as case, they can avail the provisions of Section 121. They to claim the sum of money they receive from the sale of their home as tax-free.

Putting up your ranch for sale is a complex procedure. If you don’t take the right decision, the transfer can adversely affect your current financial situation. This is because you incur high tax liabilities on the sum of money you receive. However, you can reduce the burden by keeping in mind the above two important tips.

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