Okay, I read the other two responses, then re-read my first one and then your original one again. I responded the first time on what I think was a pretty much legal/.business level. The other two reacted on more of an emotional level, I think.
One detail I caught more in my eye this time is that you say something about his cash salary needing to be greater to stay and live there, and the necessary raise being equal to what the farm is paying for the land, taxes and utilities now...this implies to me that the land is under a lien. Correct?
Can he stand for the loan on his own? Can you afford to pay it off, so you could transfer it to him? You cannot give him something unless you own it. YOu rlender may allow you to parcel off a portion of the property that roughly equals the equity you have in it, but then your local government has to agree to that division.
There are some significant tax questions involved with a transfer of this nature, too. Even prpperty taxes can become significantly changed in certain cases. In-family transfers ( thus, the present ownership question) are usually exempt from rollback taxes on transfers of land in use-deferred taxation programs. Here on this little farm we own in NC, the five years of rollbacks today would be over $60,000.
Is that parcel large enough to qualkify for use-deferred taxes on its own? MMinimum acreage requirements are usually ten acres or more, adn you may get it , even if that parcel is smaller, because the land is wihtin fifty miles of other acres owned by the farm (typical loan use tax code terms...your local code may vary).
There are a hundred questions I would need to know answers on for this to be done properly. just from a business perspective. What happens to the income from crop on that acreage? If he owns it, then the farm has to rent it back, or do shares, and then the money may not work out for the farm, too.
Lots of questions...what sounds simple at first glance often may be quite complex, when you go about doing it. What you may end up doing is transferring the house and a small homestead acreage, and then the farm paying off the rest of the land. (That answers his problem about improvements...which were obviously more of an issue in his growing-up household than not.)
Then when it's paid off, working with him to make a purchase of it part of his package. Main problem now is: the way I read your statements, you cannot give him something you don't own in the clear yourself.
I am with mike on the question of "Who is the farm?" Is that his parents now, or still parents and grandparents, or a corporation, an LLC, etc.??? That can make a serious legal/tax difference.
On the emotional side, his situation now is not uncommon for a farm kid returning to the family business, I think. As a valuable asset, land is a big sticking point in situations like asking a new bride to sign a pre-nup v risking having to buy her out if the marriage doesn't make it. Again, a smaller acreage with the cruddy shack may be easeir to risk, than a whole farm.
Can you folks stand it if he gains ownership, knocks down his current home, and uses the land to secure a big mortgage on a fancier house? You will be giving up total control, if you give up ownership. You have had no "freedom to do what we want." That is a huge deal when you are talking about the home your family occupies.
Sometimes, you want your children to have something you never had for yourself. For example, Mike and I wanted our kids to have more fun than we had...I still want to vomit when I hear someone say, "Time is money." My father drove us like little slaves with that one. His family lived a very conservative lifestyle, so he wanted our children to have a bit wider experience.
If your som heard you and your spouse at any point wishing you could just do what you wanted with the house, then that had a significant impact on his wishes to own his own place. My parents lived with his folks their first few years of married life. It was not good.
There is a legendary conversation in which one of my husbands' old aunts advised my mother, "Girl, live in a s*&t house, before you live with your in-laws...." Truer words were never spoken, and it doesn't have to be in the same househild.
The ":principle of ownership and freedom" you mention are significant desires in the human race. I think there is a way for your son to have what you want to give him, but you have a lot of research to do first.
