1031 Exchange Into Farmland

How Section 1031 Works

Like-kind property exchange with Qualified Intermediary. 45-day identification period, 180-day exchange period. Three-Property Rule or 200% Rule for identification.

Why Farmland

Clear like-kind qualification, stable valuation (~10.5% annualized returns), immediate income from cash rent, lower management burden, inflation hedge, step-up in basis at death.

Exchange Structures

Delayed (forward), reverse, and improvement (build-to-suit) exchanges. Reverse eliminates time pressure but costs $5K-$15K+.

Due Diligence Under Time Pressure

45 days is insufficient for traditional farmland evaluation. Need SSURGO soils, FEMA flood, NWI wetlands, CropScape crop history, USGS groundwater, NASS economics, NOAA climate, NREL solar — eight federal data layers per parcel.

Common Mistakes

Starting search after selling, ignoring soil variation within parcels, not verifying crop history, overlooking drainage and wetland issues, using wrong QI, forgetting about boot.