As any lawyer who practices real estate law will tell you, selling a farm is a major financial transaction that involves many complex legal- and tax-related concerns. A farm sale is a far more intricate and involved process than selling a house or a parcel of land, and it can be helpful to have some idea of what to expect before listing your acreage. To that end, below are three things real estate lawyers often tell their clients who are selling farms.
3 Important Considerations to Bear in Mind When Selling a Farm
1. Find a Real Estate Agent Who Specializes in Farm Sales
The farm you own is likely an enterprise in which you've invested considerable money, time, and work. In many situations, farms have been in the same families for generations. So, not only does a farm possess most of one's financial holdings and net worth, but it is also a symbol of one's hard work and family history. For these reasons, you want someone experienced in farm sales to handle the transaction. There are numerous additional steps and procedures that play into a farm sale; trust an agent or broker who knows how to handle these delicate factors.
2. Understand Your Tax Obligations Beforehand
A farm comes with a significant price-tag, and in any highly appreciated property, there are tax consequences sellers need to prepare for. Depending on the type business organization that owns the farm (such as an LLC or corporation) and the federal and state tax rate, sellers could be left paying 25 to over 50 percent of the sale price in taxes alone. One solution is to utilize IRS Section 1031, which allows a seller to exchange one property for another in a like-kind sale to avoid certain taxes. You sell the farm, buy another with what is made from the sale, and then defer capital gains taxes.
3. Hire a Lawyer to Deal With the Legalities
Any area of law can quickly become complicated terrain to navigate, and this is especially so in real estate law and farm sale issues. Hiring a lawyer beforehand will make you an informed and empowered part of the process. An attorney will help you explore the most efficient ways for the business and legal structure that owns your farm to successfully complete the sale. They will also take care of the details that need tending in any real estate transaction, like writing and reviewing contracts and protecting your interests.
The above tips can give you substantial peace of mind during what might otherwise be a stressful process. The real estate lawyers at The Law Offices of Bromm, Lindahl, Freeman-Caddy & Lausterer are here to help. Since 1893, they have been representing Saunders County, Nebraska, in a variety of legal matters, including real estate and farm sales, estate planning, and family law cases. Call (402) 443-3225 or visit their website to schedule an appointment.