Farmland Is a Significant Collateral Source for Any Investment Portfolio

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Farmland is an exceptional investment that has grown in value at two percent higher than inflation since the 1950s. Buying agricultural land can be a great move for farmers and investors; it can open doors to unique tax advantages and investment returns.

One of the reasons behind the continued appreciation is the high demand for products such as meats, grains, fruits, vegetables, and specialty crops for use in homeopathic or natural medications.

Historically, farms offer higher returns than other real estate types and seem to have a much lower risk level. Moreover, agricultural land typically escapes stock market fluctuations and continues to grow in value; the price of the land itself has nearly doubled in most U.S. regions.

farmWhen the land is used as a farm, the income generated is exempt from the wealth tax; an annual tax levied on net worth. Also, while property taxes differ from state to state, most determine whether a farm is eligible for tax breaks by reviewing its size and income.

Additionally, mortgage interest on agricultural land is tax-deductible. However, it is important to note that unlike purchasing a home on a 15 or 20-year mortgage, farmland is generally required to be paid off within three to four years.

Another lucrative source of income is the government in the form of grants available to farmers. These grants cover a vast range of assistance, but most generally, they will help with growing crops — from seeds to equipment.

Investors find that farmland is an attractive way to diversify their portfolios. The appreciation value looks strong in the future as demand will continue to remain high.

Written by Cathy Milne-Ware

Sources:

Realtors Land Institute: Why Farmland Is A Good Investment
Midwest Land Management: Don’t overlook these benefits of buying farmland

Featured and Top Image Courtesy of Frank Shepherd’s Flickr Page – Creative Commons License
Inset Image Courtesy of Shannon Dizmang’s Flickr Page – Creative Commons License

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