Selling a Farm if it's Rented or Leased?

Top 50 Questions about Farmland

 Hey, it's the Iowa land guy. And here's the top 50 questions that I get asked about farmland. Can I sell my farm if it has been rented out or leased for this year? So remember in Iowa leases or lease termination rather is due in September. So if you haven't served lease termination, yep, we can still sell your farm.

If you have served lease termination, great. Then it's an open lease agreement for the next year, which oftentimes brings a little bit more money. Um, they're, the new buyer is not subject to the lease that's in place, but just like selling a hotel or selling a, uh, uh, shopping mall, they don't kick everybody out to then sell the property.

Um, they sell it subject to the lease. You can also sell subject to the lease. And so, then the question becomes, who gets the cash rent? Um, sometimes it depends on the time of year, sometimes it depends on the motivation of the seller, and sometimes it depends on the motivation of the buyer. That's a conversation that we have with with all of our sellers is, uh, what are we going to do with the cash rent this year?

There's also tax implications to think about. If you collect the cash rent, it might be ordinary income. If you take it as a deduction off the price, you might have less capital gains tax. So lots of things to think about when it comes to cash rent and is your farm leased for the year?

David Whitaker | Iowa Land Guy