Higher Tax Rates on Land Sales

by Andy Biebl, CPA

With the slowdown in farmland appreciation, we may see retired landlords and investors willing to sell. But there is a new barrier; higher capital gain rates. With land sellers now often facing 23 to 25% federal rates plus additional state income taxes, we will see sticker shock and an unwillingness to deal. As we learned coming out of the Reagan era, higher capital gain rates suppress selling activity; lower rates stimulate ownership changes.

THE NEW RATES. ┬áPreviously, a large gain from the sale of farmland was taxed at a flat 15% federal capital gain rate regardless of the amount. But starting in 2013, as total tax return income moves up the ladder, three new tax rate increases apply to land gains…..Higher Tax Rates Deter Land Sales Article.pdf

Reprinted with Permission, April 2014, Telvent DTN LLC

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