Posted by JD Seller on January 26, 2016 at 18:06:35 from (208.126.198.123):
I am selling my brother some ground. I bought this land 30 years ago. The farm is split by a pretty big creek. There are limestone bluffs 50-60 feet tall in places. To get to the back half you have to drive around the block so to speak. That is about a 4 mile drive. The back is against my brother's farm. So he has always farmed the back and just paid me rent. Well now he wants to build a cabin/house looking over the bluffs. Smaller place 1200-1500 sq. ft. He is thinking to use it as a weekend place for now with out doing much finishing right now. Then over time fully finish the place as a retirement home.
Anyway he will be buying about 35 acres. I bought this at about the bottom of the farm crisis in the 1980s. So capital gains would bit on it. So I am wanting to roll the money back into real estate. (1031 exchange) So here are my questions.
(Tax guy out of town until next week) 1) Does it make any difference what type of real estate the money is rolled back into??? Meaning this is farm/pasture ground can I buy a rental house and still roll it???
2) If I am understanding this correctly you only have 45 days to complete the exchange.
The main reason I am asking this is my brother is raring to get started building. So he wants to go as soon as the ground is thawed. I do not have any real estate in mind that would be of interest for me to buy right now. There are some houses around that might be of interested as rentals. As far as farm ground I think there is a ways to go before the values hit bottom so I do not want to buy this year. So I am thinking of working out a deal with him basically having possession but with us not doing the actual transfer until a later date. I am not worried about him on the ground for two reasons. 1) It will be a cash transaction between us. 2) I have never used the ground he is buying anyway. It was the scrub part of the good ground on my side of the place. So its value was real low in 1986.
So I am trying to get my head wrapped around a way for this to work without me losing out to taxes. I have no motivation to sell. I am getting a return on what he farms. So I do not want to pay a bunch of capital gains and end up with less income than I now am getting.
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Today's Featured Article - Hydraulics - Cylinder Anatomy - by Curtis von Fange. Let’s make one more addition to our series on hydraulics. I’ve noticed a few questions in the comment section that could pertain to hydraulic cylinders so I thought we could take a short look at this real workhorse of the circuit. Cylinders are the reason for the hydraulic circuit. They take the fluid power delivered from the pump and magically change it into mechanical power. There are many types of cylinders that one might run across on a farm scenario. Each one could take a chapter in
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