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There are plenty of things to consider when buying a farm for the first time. There’s the equipment, the livestock, the maintenance, but before you begin thinking about any of that, the first step is figuring out how to finance a farm. It can be a daunting task to take in all at once, but these financial resources can help you turn your dream of owning farmland into a reality.
Getting qualified for a farm loan takes proper planning. Conterra Ag, or other agricultural specialty lenders, offer products that are tailored for the industry. They have the knowledge and background in the rural property sector. Another common resource for rural landowners and future farm buyers is the Farm Credit system. This network of financial farm resources focuses on rural communities, offering financial assistance and tools for buyers under the age of 35 who have 10 or fewer years of experience. Most Ag loans can be used to buy land, livestock, equipment and contribute to general farm improvements.
The United States Department of Agriculture (USDA) supports sustainable agriculture research and education. To help enrich these initiatives, the USDA offers grants for farmland that focus on new farmers buying new farming equipment. As a first-time farm buyer, these grants can offer a big boost. Look to see if your farm qualifies for this type of financial assistance.
The U.S. government offers tax benefits for people going into the farming business. The U.S. tax codes defines a farm as land that includes “stock, dairy, poultry, fruit, fur-bearing animal, truck farms, plantations, ranches, nurseries, ranges, greenhouses or other similar structures used primarily for the raising of agricultural or horticultural commodities, and orchards and woodlands.”
It’s important to understand if your property qualifies for farm tax benefits. If it does, you will need to provide proof of your farm business plan to demonstrate that it is a profitable enterprise. This includes a comprehensive profit and loss statement. Other things to consider and discuss with your CPA and real estate professional regarding your farmland purchase are: depreciation, deductible expenses, fuel tax credits, renewable energy tax credit, and agricultural research and development tax credit.
Buying a farm for the first time is an exciting prospect, and one that comes with a variety of ways to make it a more affordable one. From first-time farm loans to farmland grants and farm tax benefits, the resources are vast and aimed at helping buyers make their farm profitable. To learn more about buying a farm or locating farmland for sale near you, contact the real estate experts at Hayden Outdoors. Our highly experienced team can help you navigate the ins and outs of securing your dream farm property.
Still not sure where to start? Reaching out to a real estate professional who specializes in farmland transactions is a great first step!