Sell Your Farmland for Cash

Selling Farmland: What to Know

Farmland sells differently from a house lot. Buyers look at the soil, the water, the access and any lease or program contract on the land. The tax side is different too. Many states tax farmland at a lower use value, and some charge back taxes when the use changes.

This page walks through what to check before you sell cropland, pasture or timber ground, and what each way of selling looks like. It applies to a 20 acre pasture in South Carolina and to a quarter section of Illinois cropland alike. If you want a quick number, try the land value estimator or read how much an acre of land is worth.

What farmland buyers look at

A farm buyer pays for what the land can produce and how easy it is to work. Gather the facts below before you set a price. Buyers will check them anyway.

Start with the soil. The USDA Natural Resources Conservation Service runs Web Soil Survey. You draw your field on the map and it shows the soil types and how they rate for crops. Many buyers and appraisers start there.

• Soil quality: soil types, slope, drainage and how much of the farm is tillable versus pasture or woods.
• Water: wells, ponds, creeks, irrigation equipment and any water rights that go with the land.
• Access: frontage on a public road, field entrances and any easement you use to reach the back fields.
• Contracts: farm leases, hunting leases, CRP or other program contracts, and any wind, solar or pipeline easements.
• Timber: a stand of mature trees can add value. Some owners sell the timber separately before or after they sell the land.
• Improvements: fences, barns, grain bins and drainage tile. Note their age and condition.

Farm leases and USDA program contracts

A tenant often stays on the land when it sells. Read your lease before you list. Look for the end date, how either side can end it, and who keeps the crop and the payments for the current year.

Many farm leases are verbal or renew each year. State law often sets how and when a landlord must give notice to end one, and the deadline can fall months before the lease year ends. The rules vary by state, so check your state's law or ask an attorney before you promise a buyer an open farm.

If any acres are in the Conservation Reserve Program or another USDA program, call your county Farm Service Agency office before you sign a sale contract. CRP contracts usually run 10 to 15 years and pay a yearly rent. Ask the office what happens to the contract and the payments when the land changes hands, and tell buyers early.

Conservation easements

A conservation easement is a recorded agreement that limits what anyone can do with the land, such as building homes or splitting it into lots. The owner gives up some rights to keep the land open. The IRS explains that a donated easement can qualify for a tax deduction when it meets the rules.

An easement is meant to stay with the land when it sells. That limits the buyer pool to people who want the land for farming, timber or recreation, and it usually lowers the price compared with land that can be developed. If your land has one, give buyers a copy of the recorded easement and the holder's contact.

The IRS also warns about promoters who sell inflated easement deductions to investors. Be careful with any offer that promises a deduction far larger than what you pay.

Farm tax assessments and rollback taxes

Most states tax qualifying farm and timber land on what it can produce, not on what it would sell for. That keeps the yearly tax bill low. Some states then charge extra tax for past years when the land stops qualifying, often called rollback or deferred taxes. A sale does not always trigger it. A change of use usually does, such as building houses or taking the land out of farming.

Here is how four states handle it. Rules change, so confirm with your county tax office before you close. This page is general information, not legal or tax advice.

• North Carolina: land in the present-use value program is taxed at use value, and the difference is carried as deferred taxes. When the land loses eligibility, the deferred taxes for the three prior fiscal years plus interest come due (G.S. 105-277.4). A buyer who keeps the same use can file within 60 days of the transfer and accept the deferred tax liability (G.S. 105-277.3).
• Texas: land with 1-d-1 open-space appraisal is valued on agricultural use. If the land changes to a non-agricultural use, the owner owes rollback tax for each of the previous three years plus interest (Texas Comptroller).
• South Carolina: agricultural land is assessed at use value at a 4% ratio for individuals. Timberland needs five acres or more and other agricultural land ten acres or more. When the land goes to a non-agricultural use, rollback tax covers the current year and the three years before it (S.C. Code 12-43-220).
• Illinois: farmland is assessed on its productive value, based on soil productivity ratings, not on market value (Illinois Department of Revenue). Ask your county supervisor of assessments how a change of use will change the assessment.

What farmland is worth

Farm value varies a lot by state and by field. The site's recent market data includes USDA survey estimates of average value per acre for 2023. These are survey averages, not sale prices for your farm.

For prices in your area, open your state's land price page, such as Illinois land prices or South Carolina land prices. Texas and Missouri do not require sale prices to be disclosed, so local sale data there is limited.

• Iowa cropland: about $9,410 per acre.
• Illinois cropland: about $9,250 per acre.
• Nebraska cropland: about $6,150 per acre.
• North Carolina cropland: about $4,800 per acre.
• Missouri cropland: about $4,720 per acre.
• South Carolina cropland: about $3,600 per acre.
• Texas cropland: about $2,490 per acre.

Capital gains and 1031 exchange basics

When you sell land for more than your basis, the profit is a gain. Land you held more than one year gets long-term capital gain rates of 0%, 15% or 20%, based on your income (IRS Topic 409). Higher earners may also owe the net investment income tax. Land you inherited usually has a basis equal to its value on the date of death, which can shrink the gain a lot.

Land you farmed is business property, and the rules for it differ from land held only as an investment. The IRS Farmer's Tax Guide and Publication 544 cover sales of farm land, timber and equipment.

A 1031 exchange lets you put off the tax if you buy other business or investment real estate. You must name the new property within 45 days and close within 180 days, and a qualified intermediary should hold the money. Cash you keep is taxed. Talk to a tax professional before you sign a contract. This is not tax advice.

Your options: auction, farm broker or cash buyer

Each way of selling trades price, time and effort differently. Pick the one that fits your land and your timeline.

• Land auction: common for good cropland in farm states. It sets a sale date and lets local farmers bid against each other. You pay the auction company a fee, and results depend on who shows up that day.
• Farm and ranch broker: a broker who knows farmland can market it to farmers and investors. Expect a commission and a longer wait, often months, for a buyer and financing.
• Sell to a neighbor or tenant: often the most likely buyer. You still need a contract and a title company or attorney to close.
• Cash buyer: a land buyer makes a direct offer and closes without a lender. This is often faster and simpler, especially for pasture, cutover timber, small tracts or land with title or tax problems. The price may be lower than a full retail sale.

Selling your farmland to us

EasyLotBuyer buys rural land for cash, including cropland, pasture and wooded acreage. Send us the county and parcel number and we will make a cash offer within 24 hours. There are no fees or commissions, and we pay the closing costs.

We can close in as few as 7 days, or on the date you choose. We buy land with back taxes, liens, title issues or no road access, and land inherited by heirs or held in an estate. Back taxes are paid at closing from the sale.