Buying Land

[Eagle]

Anybody on here with experience buying land that has a lot of timber value on it. Looking at buying a farm that has almost as much timber value as the asking price. Plan on talking to a CPA in the near future about tax implications and the like, but was curious if anyone on here could provide some insight into how things work when buying a farm and then immediately harvesting a lot of timber off of it.

 

[William Hanson (live2hunt)]

It varies a bit by state I believe. There is a guy here in MO I know that bought a ton of land in relatively small parcels (25-150acres) and would pay it off use the timber. It did affect his taxes quite a bit since the timber was considered extra income but I believe he said there was some sort of write off in owning the land and having its value depreciated so it wasn't quite as bad as he expected. Your local tax codes may be totally different though so you probably should talked to an accountant. What specifically are you wanting to know?

 

[Forestryguy]

I would talk to your CPA and also a forester. The forester should know the tax laws that are about timber sales and income. These laws vary widely through the states.

 

[RockChucker30]

I was a loan officer for 8 years and had a lot of dealings with farm and timber properties.

Talk with a good CPA. Emphasis on good. There are a lot of things you can do with Section 179 depreciation of improvements and equipment to offset income.

Are you getting a mortgage? If so make sure your lending institution is on board.

Hire a certified forester. You can find one who will cruise the property and then bid it out to several different companies for you. Set expectations of what the property will look like when they are done cutting, and set them in stone. Lots of cutting crews get lazy on landings and cleanup work.

A timber cruise before you buy the property may not be a bad idea.

 

[Eagle]

Been talking to a forester who's a friend, but this farm is a couple states away, need to get in touch with one that lives near the farm. I know there's a way to do two different sales, buy the land in one sale and buy the timber in another. That allows you to essentially show virtually no profit from the timber sale and will keep taxes due low, but I don't know the individuals selling the farm and would guess that this is generally a difficult thing to do.