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k-289
Senior Advisor

Re: Land............

Like most things in the financial world timing and I guess some would call it luck can make an investor a geniuses or poor investor ---having purchased some railroad stock in the 80's and 90's was questionable then --- putting any kind of figure on an asset is only fodder unless you are remarketing --- 

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Kstater85
Veteran Contributor

Re: Land............

"those that consider farm land an intergenerational investment"

 

I agree but i am concerned about the coming changes in the estate tax.   What is everyone doing to make sure you can pass on $10,000 acre land?

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k-289
Senior Advisor

Re: Land............

Time and again I could give examples of the estate arena being clouded with the hand wringing of estate taxes - and the indebtedness of the estate being a larger issue than the estate tax ---example of  10,000 acre ranch being worth 4 million and saying the estate tax was the reason for selling --- come to find out there was a 1 million  debt encumbered towards it and the cow herd was liquidated so the place didn't look as lucrative after the facts where on the table ---although the gibberish about estate taxes laying blame on the transfer of assets --- the  "debt " was put in the  "lets not talk about it "  file --- be statisfied you have  10K land to deal with and  ""political will "" of either party to deal with this is probably "" executive session "" stuff ---  

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ILFARMER
Senior Reader

Re: Land............

I don't think land has peaked yet. I suspect you will see some record prices this winter. Everyone wants more. 

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jjoseph
Frequent Contributor

Re: Land............

Land will still be hot in Minnesota, just about doubled in the last three and half years

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BA Deere
Honored Advisor

Re: Land............

Federal estate haven`t been and issue the last few yrs, however if something isn`t done, next yr everything over $1 million in an estate will be subject to a 55% death tax ..I know I know Don, I better off myself this year har har har and "Obama is just holding the Republican`s feet to the fire, if they capitulate to the president`s other demands the exemption may be raised to $3 million".    Yes, in the past "not many family farms have been lost to estate taxes" but that`s a changin`.  Don`t forget in many states there are "state estate taxes" if that`s say 15%..pert near 2/3rds of some estates will go to Uncle Sam, if nothing is changed, if that isn`t "wealth redistribution" I don`t know what is.   Also when payments are made on a farm, it is "after tax dollars" that make those payments.  So, a farmer pays 25% income tax on money that he makes his farm payments dodges grain embargos, droughts, floods and getting tangled in a combine.  When he dies his kids will then have the distinct pleasure of paying 55% tax on everything over a 80???  Gimme a break.     

vrbuck
Advisor

Re: Land............

You forget what making payments with 15 percent interest is like. It sucks and we may be looking at it.
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sw363535
Honored Advisor

Re: Land............

VR,

 

I thought about that when reading the discussion on farm land prices.  Interest rates will certainly adjust land values quickly.

 

Tight money supply.   What a shock that would be.

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k-289
Senior Advisor

Re: Land............

I  think it would be a  "" LONG SHOT "" to think there will be a lot of excess sympathy  from urban law makers as far as pulling off a wildcat estate bill ---   re-election talk  is  cheap -except for the cost of  TV time - end results after the fact are another --- another trip back to the estate attorney is probably in order --- 

GoredHusker
Senior Contributor

Re: Land............

I read a blog from an economist that pointed to two different directions we might go.  The first one or the best scenario led to an economy much like what Japan has endured that past few decades.  The second one or the worst scenario led to a Greek style economy.  Under the first scenario, interest rates will remain near zero for quite some time meaning land prices will hang in there.  Under the second scenario, interest rates will sky rocket and land prices plummet.  I have to agree with the assesment.  Unfortunately, I just don't have a real good feel whether we head towards a Japanese style economy or a Greek style economy.

 

Another thing that caugt my eye a couple of days ago was a farm cpa's blog regarding farm leverage.  He was strictly using Kansas comparing debt to asset ratios from 1979 to 2010.  According to him, farmers in Kansas have higher debt to asset ratios now than they did in 1979.  He did acknowledge that Kansas has a lot of concentrated livestock producers which could have some impact on those debt to asset ratios when comparing them to other states like IA and IL.  His basic assesment was KS farmers would be in more trouble today if hit with a 1980's scenario than they were back in the 80's. 

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