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As the title says I am looking into the tax implications of selling my farm. I need to talk to someone since I live in Alberta and farm in Sask. Any recommendations on a straight shooter.
 

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CP I am sorry to read it has come to where you have to say this, I know things haven't been good in your world lately but I know how much you enjoyed that place. Often had thought would have been nice to have you for a neighbor, we could have helped each other. But life charges on, hope things work out in the end.
 

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Land owned personally or corporately?
Personally owned, I had no crops in the last 24 months just chemo followed. there is a section I don't fully understand about your gross receipts that will establish if you have to pay capital gains.
 

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CP I am sorry to read it has come to where you have to say this, I know things haven't been good in your world lately but I know how much you enjoyed that place. Often had thought would have been nice to have you for a neighbor, we could have helped each other. But life charges on, hope things work out in the end.
Thanks, it is a very emotional conclusion to the farm my grandfather survived WW1 Poland to live his dream of freedom. But you have to let go, he did when he left the original farm in Poland for who knows how many generations farmed that. I don't see farming getting any better, it is a hard go. But I need to see if I can exit first. might just sell the equipment and just use it as a rec property, and rent out the rest. But who knows how this pandemic will play out might start growing vegetables, Lol.
 

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Personally owned, I had no crops in the last 24 months just chemo followed. there is a section I don't fully understand about your gross receipts that will establish if you have to pay capital gains.
The first mil is all yours then, everything over will be capital gain taxed but you have two years to replace with farmland to recapture taxes.
Taxes have to be paid the first year though.
 

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Be careful, CP. The big word "inflation" is being kicked around now as we enter recovery phase from the pandemic mishandling. If you sell now, inflation could whittle your nest egg down significantly over the next period. Your idea of selling equipment and renting out land would be a more sound one, under the circumstances.
That also gives you something to work at, as you would have the time to fix and detail your equipment before you sell it, to extract maximum value.
 

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Most any accounting firm with multiple accountants that works in a rural area with farmers could give you good advice.

There are many different rules that determine if you are a farmer and eligible for the capital gains exemption. It is very important that you qualify for this. You don't actually have to even farm, as long as your parents or grandparents did for 50% of the years that it has been owned by the family or you have for so many of the last 10 years. Lots of rules and interpretation can be difficult, so if you are serious, pay some money and hire a professional.

Personally, I think that the federal government is going to be broke after this corona virus deal and remove or reduce the capital gains exemption on farm land. Trouble is they could enact this rule at any time, so you never will know if you are safe until the tax rules come out early next year. But if I was thinking of selling and had enough capital gains worth considering, I would be tempted to sell this year. Hoping that the exemptions don't change until next year and then you will pocket more of the sale money.

Not sure what things are like in Saskatchewan, but in Southern Alberta save your money and do not hire a realtor. Put it up for tender working with a lawyer, advertise away.
 

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Thanks, it is a very emotional conclusion to the farm my grandfather survived WW1 Poland to live his dream of freedom. But you have to let go, he did when he left the original farm in Poland for who knows how many generations farmed that. I don't see farming getting any better, it is a hard go. But I need to see if I can exit first. might just sell the equipment and just use it as a rec property, and rent out the rest. But who knows how this pandemic will play out might start growing vegetables, Lol.
I can't fathom how difficult this decision would be to make and really hesitate to post this as I don't want to cast doubt on any decision you've come to, but I'd sure try to hold onto the ground. Rent it out, you'll always have something there that will bring in revenue.
 

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Myself, I would sell off my equipment over 2 or 3 years, so you don't get hammered with recaptured depreciation! Neighbor had a farm sale a few years back and told me, you take your most expensive piece of equipment and give it to the government after the sale is over, he said he should have did it differently. As for your land I would rent it out, tender the rent out to a handful of neighbors on a 3 year term, or if you were going to sell, I would definitely tender it out also, that way you don't have to even accept any of the bids if you don't want to!
I've also wondered if self financing someone would work? They give you 10% down, then they make the land payments to you over 25 years, you be the bank and make the interest? You could charge interest even at prime plus zero and it would be a better deal for the buyer and for you! Plus, if they happen to not be able to pay for the land, you get it back. Does anyone know if that can be done?
Whatever you happen to do, I wish you all the best!! It can't be easy making that decision!
 

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Yes the fellow I was chatting with at Cargill last week said his uncle just sold out, owner financed, and is getting $400k per year for the next 20 years. I believe that was land and equipment. No idea on the specifics of that transaction, but it certainly can be done, lawyers will write anything up you want.
 

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That hurts. My brother-in-law decided to do the same this year. He was president of Montana Grain Growers and wrote a very nice article in one of the last magazines about this. Lots of respect for him making this decision. Quit while he can still get out and pay off his bills. I have seen others fight to the end to keep farming. Sheriff's sales as businesses try to get some money out of them. That is criminal in my eyes.
Respect when a person can make that hard decision. I did it once, was talked out of it by my landlords and others. huge insurance check I didn't expect and other things made it work out and I am still farming. Making that decision had a huge weight off my shoulders when I knew I couldn't pay the bills off from that year. It was relieving. I keep going not willing to be in a position I will not be able to get out of. I pray it all works out for the better. Keep the land if you can. Maybe hobby farm a bit if you can make that work. Might build back into something that works out. If you still have that love of farming. God Bless you!
 

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Yes the fellow I was chatting with at Cargill last week said his uncle just sold out, owner financed, and is getting $400k per year for the next 20 years. I believe that was land and equipment. No idea on the specifics of that transaction, but it certainly can be done, lawyers will write anything up you want.
wpuld that 400k not be rental income?
Reguardless best of luck. I have never seen a brinks following a hurst.
 

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The brinks truck is being driven by the govt and will make a left back to the gov't coffers while the hearse makes it's destination.
 

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I hope the oil and gas sector in Alberta can start hiring back. Combine pilot , don't know your age or family but I agree with other posters to rent out land and find work that gives you a sense of pride. I always feel its important to pass your success to your children and teach them to respect the land as an asset. This is a fact, the richest farm families hold onto there land. I have seen way too many guys sell out and leave vase amounts of money on the table. Some of them are very bitter now and working low wages now to pay bills. As mentioned in other posts inflation could be a serious issue. I would rather have tens of millions in land assets than cash out and take a capital gains hit. With land increasing every year I hope the capital gain exemption doubles(yeah probably dreaming).
 

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I hope the oil and gas sector in Alberta can start hiring back. Combine pilot , don't know your age or family but I agree with other posters to rent out land and find work that gives you a sense of pride. I always feel its important to pass your success to your children and teach them to respect the land as an asset. This is a fact, the richest farm families hold onto there land. I have seen way too many guys sell out and leave vase amounts of money on the table. Some of them are very bitter now and working low wages now to pay bills. As mentioned in other posts inflation could be a serious issue. I would rather have tens of millions in land assets than cash out and take a capital gains hit. With land increasing every year I hope the capital gain exemption doubles(yeah probably dreaming).
Christ.
Sitting on a tropical island sipping rum and fishing when ever I wanted would give me All the pride I’ll ever need
Good for you for getting out I applaud you
 
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