Selling Your Farmland
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It likely was a long hard road you traveled by the time you get the the point of selling your farm. Before reading further please review our Farm Transition and Legacy Planning and explore the links offered there. We hope you have already considered leasing your land and perhaps arrange for a ag conservation easement that would ensure it remained available for farming, thought this is not the path for all farmland owners. The focus of this information is specific to selling your farm, once you have made that decision. Information shared here includes the steps for landowner to sell their own land. If real estate brokerage or auction services are obtained, many of these steps would be facilitated by that real estate agent.
If you would like to list your property on our database to find a suitable successor, we also have a paper application available. We just ask that you send it to us either via email or physically in the mail and include a few photos that showcase the property and/or farm opportunity.
Some initial considerations:
- How much of the land do you want to sell? Consider your longer term and retirement plans and other aspects of your estate plan to decide if and when you want to sell any specific land parcels. In addition to knowing total acres, it is also useful to know cropland acres, timber acres, pasture acres, and pond sizes, as well as irrigation capacity of surface or well water resources. If you are considering creating a new farmland parcel or have some ‘cleaning up’ to do, try to have that completed prior to publicly sharing the farmland for sale.
- Who is listed on the deed as owners? It is important to know who is listed as owners of the property or properties. If a parent or grandparent passed away without a will, the parcels may be considered ‘heirs’ property‘ and require further inquiry into ownership. Consult your county land records office or visit their geographic information system interactive mapping online resource.
- Is any part of the land you might be selling encumbered by a mortgage lien? Is any part of the property currently listed as collateral for any loan?
- Determine your asking price by considering recent sales of similar properties near your farmland. While a formal appraisal can provide the most accurate estimate of current value, some online real estate companies share estimates you may consider. Additionally and upon request, NC FarmLink can provide limited information on current estimated per acre value as well as recent sales information for nearby properties. Please contact your N.C. Cooperative Extension County Ag Agent and they can request the information from NC FarmLink.
- While you may choose to engage a realtor to assist with your farmland sale, there are options available to those who prefer to sell their property on their own. Developing a no cost profile on NC Farmlink by clicking on the ‘Create a Farm Profile” might make the most sense for some farmland owners. The Ag Review offers no-cost classified ads for selling farmland. Social media such as Facebook and Craigslist, as well as online listing providers such as Trulia / Zillow provide additional options. Wherever you choose to share your farmland for sale, consider adding photos to make it more engaging.
- Potential buyers often want to know when a well was installed, as well as its depth, pump size, casing size, and pumping capacity. Other farmland issues such as leases, soil fertility, yield history, environmental concerns, drainage, allowable property uses, mineral rights, easements, property taxes, and any notable improvements. Having this information ready to share with potential buyers will be helpful to both buyer and seller.
- Taxes, Part 1. Are any of the parcels currently in the Present Use Value Tax Deferral Program for agricultural, horticultural, and forestry uses and therefore taxed at a lower rate? If the new owner continues the qualifying activity, the seller may avoid rollback taxes from the previous three years of the deferred taxes, though this must be confirmed by the county tax office and / or your financial service professionals. More information is available in this NCSU Extension Publication by Branan and Parajuli.
- Taxes, Part 2. The original purchase price of the farmland tract is considered the basis. Capital gains is determined by the sales price minus the basis or original purchase price and this may be taxable depending on taxable income. Consult your accountant of financial professional to determine your possible capital gain tax liability. Also consider options for 1031 Tax Exchange that allows sellers to purchase a different property and defer capital gains tax that otherwise would have to paid when the original farmland is sold.
Reach out and contact us here at NC FarmLink if you think we can be of further assistance.