There are many important financial issues to be aware of when selling a farm or ranch. Planning for a sale with a team of advisors well in advance of a sale is critical for identifying these issues and for implementing strategies to effectively deal with them. One of the biggest issues is the income tax that can result from a sale.
Selling highly appreciated (or depreciated) property can result in a large tax bill. Taxes due on the sale may range from 20% to over 50% of the sale price depending on the cost basis of your property and how your property is owned. Prior to listing your property, it is wise to have a CPA perform a tax projection on the sale. Having an estimate of the tax bill you would face is valuable information when considering tax-saving strategies.