The “Why” Behind Having a Tax Strategy
How to Keep More of What You’ve Built
You’ve spent years—maybe generations—building your family’s legacy through your land and hard work. When it comes time to transition, sell, or pass down your farm, how you handle the tax implications can make all the difference in how much of that legacy you actually keep. Here’s why a proactive tax strategy is essential to keeping more of what you’ve built.
Capital Gains: The Hidden Cost of Success
As your land appreciates in value, selling it can trigger significant capital gains taxes. Without planning, a large portion of your sale proceeds could go straight to the IRS instead of your family’s future. For example, a farm inherited decades ago and sold today at much higher value can result in a hefty tax bill if you don’t leverage available strategies. Options like charitable gifts, conservation easements, or 1031 exchanges can help reduce or defer these taxes, preserving more wealth for your heirs.
Depreciation Recapture: The Overlooked Tax Trap
If you’ve claimed depreciation on your property over the years, selling it can also trigger depreciation recapture—a tax on the amount you’ve previously deducted. This often comes as a surprise and can further erode your net proceeds. Proactive planning with a qualified advisor can help you anticipate and mitigate this liability, ensuring you’re not caught off guard.
Passive Income Considerations: Planning for the Next Chapter
After a sale, many landowners look to generate passive income through reinvestments—whether that’s direct ownership, DSTs, or other vehicles. Each option has its own tax implications, from ongoing income taxes to estate transfer impacts. The right strategy can help you balance income needs, risk, and long-term legacy goals.
Protecting Your Legacy: More Than Just Numbers
A thoughtful tax strategy isn’t just about saving money—it’s about protecting your family’s story and ensuring your land’s value benefits future generations. Tools like conservation easements, charitable trusts, and strategic gifting can reduce estate and income taxes while aligning with your values and vision for the land.
Why Go It Alone?
Tax laws are complex and ever-changing. The difference between a reactive and proactive approach can mean hundreds of thousands of dollars—and the difference between a legacy preserved or lost. Working with impartial, experienced advisers ensures your strategy is tailored to your unique situation and family dynamics.
Ready to keep more of what you’ve built? Engage with our firm for expert guidance through every step of your transition. We’ll help you protect your legacy, minimize taxes, and secure your family’s future.
