Cheaper food just around the corner - Thanks General Assembly!

[wagyu52]

Could you be persuaded to elaborate on this for the non-accounts among us (including Yours Truly)?

https://en.m.wikipedia.org/wiki/Like-kind_exchange

You own 40AC of highly valuable land near your favorite urban sprawl, it's been in your family for generations and is still farmed. The rental income (say $8000) barely pays the property taxes, if you sell it the IRS is going to take 40% or so for capital gains. I want to buy it and build a Walmart but instead of paying you $6 million and you lose $2.5, I go and buy you 640AC of rural farm land in Benton county and we trade no taxes paid. Now you have a rental income of $224,000 from your original 40ac and had to pay -0-

 

[IndyDave1776]

https://en.m.wikipedia.org/wiki/Like-kind_exchange

You own 40AC of highly valuable land near your favorite urban sprawl, it's been in your family for generations and is still farmed. The rental income (say $8000) barely pays the property taxes, if you sell it the IRS is going to take 40% or so for capital gains. I want to buy it and build a Walmart but instead of paying you $6 million and you lose $2.5, I go and buy you 640AC of rural farm land in Benton county and we trade no taxes paid. Now you have a rental income of $224,000 from your original 40ac and had to pay -0-

Thanks!

 

[wagyu52]

The 1031 seems like a good idea, cap. gain tax is legalised stealing and I'm all for avoiding taxes. Problem is it has artificially raised the price of land beyond what it is worth for the income it generates and average farmers can afford.
It has also created its own new industry, farm flippers. The window for the exchange is only about a month, this was on purpose to keep 1031's at a minimum thinking it would be rare to Line up like value ground that fast.
However large farmers and investors now go and buy tracts of land with the intetions of never making a payment. Just hold it long enough to resell it as a 1031, the price irrelevant because the buyers stand to loose so much more, they can pay way over market or tack on 10-20% and nobody even blinks.
Flippers can also increase the value of the ground by adding extras into it, removing fence rows, woods,old buildings, adding drainage tile and even Irrigation. Just like you would flip a house.
1031's have also created another problem by locking land in irrevocable trusts, if you ever sell your 1031 not only do you pay cap gains on your original ground but also a penalty. I think there might be time limit when the penalty ends but I'm not sure.