The Land Sale Tax Problem

You’ve spent years building value in your land. This guide explores key considerations to understand before deciding what comes next.

Tax Planning

Real Estate

Retirement Income

Wealth Transfer

PLANNING WHAT COMES NEXT

Selling the Land Is Only the Beginning

For many agricultural landowners, the property represents decades of work, appreciation, and family wealth. When it comes time to sell, the decision can affect much more than the land itself.

Taxes, retirement goals, future income needs, investment choices, and the transition of wealth to the next generation can all become part of the conversation.

The Land Sale Tax Problem was created to help landowners better understand those considerations before a sale takes place and explore some of the options that may be available afterward.

What You'll Learn Inside the Guide

From early money conversations to investing, independence, and inheritance, this eBook explores the financial habits and family practices that can help children become more capable stewards of wealth.

Understanding the Tax Impact

Learn why highly appreciated land can create a significant taxable gain and what factors may influence the amount of sale proceeds available afterward.

What Comes After the Sale

Explore some of the decisions landowners may face when determining how sale proceeds fit into their broader financial picture.

How a 1031 Exchange Works

Understand the basic purpose of a 1031 exchange and how qualifying replacement property may allow taxable gain to be deferred.

Understanding Delaware Statutory Trusts

Learn how a DST works and why some landowners may consider professionally managed real estate as an alternative to directly owning another property.

Balancing Simplicity and Control

Review some of the tradeoffs involved with passive real estate ownership, including liquidity, control, fees, market risk, and sponsor risk.

Planning Ahead

See why timing matters and why evaluating your options before a sale may provide more flexibility than waiting until the transaction is already complete.

Selling appreciated agricultural or investment land is being considered.
Retirement or a reduction in property management responsibilities is becoming a priority.
The potential tax impact of a sale is an important concern.
Reinvestment options for sale proceeds need to be evaluated.
Passive ownership is more appealing than taking on another directly managed property.
Future income needs will play a role in the decision.
Family wealth is heavily concentrated in a single property or location.
Transitioning wealth to the next generation is part of the broader plan.

Is This Guide Right for You?

Every land sale is different, and the right path depends on more than the value of the property alone. If a significant portion of your wealth is tied to agricultural or investment land, selling can raise important financial questions.

This guide is designed to help you better understand considerations around taxes, retirement income, reinvestment, property management, and wealth transfer before moving forward.

Frequently Asked Questions

Questions About Selling Your Land?

Selling appreciated land can raise questions about taxes, reinvestment, retirement, and what happens next. The guide provides an introduction to several of the topics landowners may want to discuss with their financial, tax, and legal professionals.

Why can selling appreciated land create a large tax event?

Land that has increased substantially in value may create a significant taxable gain when sold. Depending on the circumstances, federal capital gains tax, state taxes, depreciation recapture, and other taxes may apply.

What is a 1031 exchange?

A 1031 exchange allows qualifying investment real estate to be exchanged for other qualifying real estate while potentially deferring taxable gain that would otherwise be recognized at the time of sale.

What is a Delaware Statutory Trust?

A Delaware Statutory Trust, or DST, is a legal structure that can hold real estate. Investors purchase a fractional interest in the trust rather than directly owning and managing the entire property.

Why might a landowner consider a DST?

Some landowners want to remain invested in real estate but no longer want the responsibility of directly managing another property. A DST may provide access to professionally managed real estate while reducing day-to-day ownership responsibilities.

When should I begin evaluating my options?

Before the sale whenever possible. A 1031 exchange includes specific identification and completion deadlines, so understanding your options in advance may provide additional time to evaluate whether a particular strategy fits your goals.

Understand Your Options Before the Land Is Sold

The land may have spent decades building value. Deciding what happens next can affect taxes, retirement income, investment decisions, and the way wealth eventually transitions to your family.

Download The Land Sale Tax Problem to learn about several of the considerations agricultural landowners may want to understand before moving forward.

Download the Free Guide