Question: If my goal is to reduce my taxable income, what is a better investment for TAX PURPOSES, rental properties or hunting land? What can be deducted/depreciated in each scenario.

Appreciate any thoughts.

Thanks,

JR

Farm/ranch land... for pure tax right offs.

With that said, goverment will get it back when you sale.

Fences, wells, electric lines, improvements, barns, windmills, mileage to and from... etc

Unless you do a 1031

True, but eventually uncle sam gets his

If you sell it and if you sell it for a profit.

Let me know when your ready to sale I mean give yours away

If or when I ever decide to it will be 1031

Sweet I've got some ocean from property in oklahoma trade you

I will only move to the Hill Country if I sell this place. Hate salt air.

Well can't say I blame you there!!!!!!! On the hill country part.

Love some salt air Feb-mid july

Well, you can 1031 both ranch land and rental property. The difference I see and practice is that I prefer to live on ranch land instead of rental property.

Which means that the tax man can kiss my a@@. He'll have to wait to tax my heirs. Which he's gonna do anyway with either property.

Which means that the tax man can kiss my a@@. He'll have to wait to tax my heirs. Which he's gonna do anyway with either property. [/quote]

If your taxable estate is below a certain threshold in terms of value of your total estate then your heirs will receive it tax free and their basis is the based of the fair market value the day they inherit it. That amount is about $5,000,000 for 2014. So there is no guarantee the tax man gets to lay his hands on anything upon you demise. If you have a sizeable estate an estate plan is a must.

Is that true with land/assets that were purchased with 1031 money? I assumed that when it went to my heirs they'd have to pay the cap gains that I avoided even if I fell below the 5,000,000 estate tax limit.

It takes a heck of a lot of ag land at the alternate valuation to add up to $5 million but you must have all your ducks in order.

That really depends on where the ag land is. River frontage ag land in some areas is rather pricey even with ag valuations.

Or Has exceptional ground water as in crop irragation.


Most good lawyers can get values down pretty good, with that said cost basis eventually caughts up with someone/heir

Valuation is not based on ag basis. It will be based on an the greater of cost, income or market value. Ag valuation are generally only used for property tax purposes for land with an agricultural exemption. Cost basis for heirs will be based on when they inherited the property not original cost basis of acquisition.

What are they going to use to figure grains when you sale?

You hitting the sauce Bo Bo?

Oops ...gains when you sell...

Point was market value is a made up number you can adjust or lower the market value with creative accounting, appraises, depreciation etc seen some pretty crazy stiff to get ranches under inheritance limits, with that said it all comes back around when you sell. Uncle same always gets his. Assuming you don't trade, of course.

It is easier finding deductions/write-offs with farm land than rentals, a lot more gray area for taking them and you don't have to fix what the tenant breaks (and they will break many things!). I have been audited on both rentals and farm ground. The audit on the rentals went a little rougher. They didn't give me 100% write-off on the cell phone bills, gas and maintenance on vehicle. I could go into a lot of detail on why and how, but I won't. I never had them take away any expenses on the farm ground....of course I learned a lot from that first audit.

Problem with rentals is that many get burnt out and want to get rid of them. By this time, it has been mostly depreciated and you cost basis is next to zero. You end up paying a lot of taxes to sell and liquidate. With land, it is easy just to not worry about it or give it to your heirs. No maintenance involved (if you don't want to).

This is coming from someone with a degree in Finance, accounting, banking and economics.

So what is the best way for a fisherman to use write offs...lake property? My corporation can buy any property right?

All,

Great information. Appreciate the insight. I've owned CRP and rentals before. Now days it is hard to find CRP or farmland that you can cash lease and break even. Someday the market will correct itself.

LG

COE conservation pound