Advantages and disadvantages of buying farmland
Buying farmland can be an attractive prospect for many, for a number of reasons. Whatever your reasons; It is imperative to have a full understanding of what you are getting into, because legal processes are often more complicated when it comes to buying farmland.
Depending on which state you belong to, there are certain laws that will prevent you from buying farmland, unless you can show that you have experience in farming or that you own another parcel of land. These laws are in effect to protect the integrity of farmers and to prevent the complete urbanization of agricultural lands in the country.
That said, it is not impossible to own agricultural land. It depends on how you plan to use the plot. Read on to familiarize yourself with the pros and cons of such an investment.
Advantages of buying farmland
Owning agricultural land can generate one of the three main incomes; You can earn income by selling crops and produce, leasing them to a farmer, or renting a house built on top of them.
Perhaps the only advantage that tempts people to invest heavily in farmland is tax exemption. The gains you make from your farmland will not be subject to estate tax, which is a type of tax that generally applies to gains made from properties.
You can also plant your own crops and apply for government grants, if you’re ready to invest your time and energy. You can rent your land to other farmers and share in the profits, but that would largely depend on several natural factors.
You can choose to share crops and let someone else grow crops on your land. You can take a part of the dividends as payment. In this way, you can ensure that your land is also cared for. You can reap great benefits in the long run. You can receive tax credits or even divide your land and sell it for a big profit.
Disadvantages of owning a farmland
The main disadvantage would be adjusting to the drastic change in lifestyle, as you would have to move closer to your farmland, which is likely to be in a rural area. Even if you don’t, traveling to your plot regularly to ensure its maintenance will take a long time. Unless you have a trusted family member or friend sticking around, you will also have to invest heavily to protect your land from invaders.
If you plan to lease the land to a farmer, the profit you make will depend on the quality of the crops. Too many weird variables, like weather and water supply, affect products, leading to unreliable profits.
There are laws that restrict the construction of a farmhouse or vacation home on your farm plot. You will need to be familiar with these additional laws to avoid legal trouble.