• You will need to login or register before you can post a message. If you already have an Agriville account login by clicking the login icon on the top right corner of the page. If you are a new user you will need to Register.

Announcement

Collapse
No announcement yet.

Farm succession

Collapse
X
Collapse
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Farm succession

    Is there any good books written on Farm succession that any body recomends reading?

    Can a person rent to own land and if you can how do you go about doing it. If you can where can I find some more information about it.

    What are your ideas about just keeping just enough income to sc**** by and deferring the rest into the next year. Then use the defered income to rent more land and keep expanding and pay as little tax as posssible each year. Some people say it will catch up with you and you should pay the tax as you go. I think once you pay the income tax the money is gone. I know there is other ways around paying to much tax like forming a LTD. company and so on. I just wanted to get other peoples opinions on deferring.

    Thank you

    #2
    There are a number of good books on farm succession. For a Canadian perspective, I would suggest "Managing the Multi-Generational Farm", a series of 4 workbooks produced by the Canadian Farm Business Management Council. A good US book is "Passing Down the Farm" by Dr. Donald Jonovic. You can check out these and other resources at: www.farmsuccession.com

    Rent/purchase agreements, while not a common method of transfer, can be useful. Part of the rent would go toward the purchase price of the land. It allows both the vendor and the purchaser enough flexibility to reconsider, unlike a contractual sales agreement. Purchase price for the land can be fixed at time of rental or at a future date. This type of agreements remove the lender, and can reduce interest costs and collateral. However, there is more risk for the vendor. He/she can't be sure the land is sold until the option is exercised. Also, CCRA will require that payments be rent plus a capital payment (thus the need to track the balance of the purchase price when the option is exercised). The risk for the purchaser is that if he/she gives up the land, any capital payment toward the purchase price is foregone. You will definitely need legal advice to get this agreement drafted up!

    Deferring income is a tax management (some say avoidance) strategy, not a financial management strategy. If your objective is to minimize tax - then do it! However, this type of strategy will catch up with you sooner or later. Why? Cash (and tax) management gives you no indication of "economic profit" on the farm. You could be losing money and equity yearly because changes in inventory are ignored. Eventually, you'll have expanded too fast and have more expenses than cash. Just ask some cattle producers who have bought cattle late in the year to avoid tax, and have to do the same thing year after year.

    The other question is - how much is "scraping by"? Very few people want to sacrifice their living standards too much to avoid tax. A key point is that both family living and income tax are "after tax" dollars. The farm must generate enough profit to cover these expenses plus cover fixed costs. Paying tax as you go may not be a bad strategy if you want the farm to be economically viable.

    Comment

    • Reply to this Thread
    • Return to Topic List
    Working...
    X

    This website uses tracking tools, including cookies. We use these technologies for a variety of reasons, including to recognize new and past website users, to customize your experience, perform analytics and deliver personalized advertising on our sites, apps and newsletters and across the Internet based on your interests.
    You agree to our and by clicking I agree.