Can I Sell My Farm if It is Leased Out?

Top 50 Questions about Farmland

Yes, you can sell your farm even if it’s leased. In Iowa, whether a farm is subject to a lease or has an open lease agreement, there are options available to ensure a successful sale.

Key Considerations for Selling Leased Farmland

• Lease Termination Deadline: In Iowa, lease termination notices are due in September. If no notice has been served, the buyer must honor the existing lease for the remainder of the term.
• Open Lease Agreements: If the lease has been terminated, the property will be sold with no lease obligations, which can appeal to buyers seeking immediate use of the land.
• Selling Subject to a Lease: Just like selling a hotel or commercial property, farmland can be sold with a lease in place. Buyers may inherit the lease terms, including cash rent payments.

Who Gets the Cash Rent?

Determining who receives the cash rent depends on several factors:

1. Timing of the Sale: Cash rent may be prorated based on the date of closing.
2. Buyer/Seller Agreement: This can be negotiated during the sale.
3. Tax Implications: Sellers can choose to collect the rent as ordinary income or apply it as a deduction to reduce capital gains taxes.

Key Takeaways

1. Farms can be sold whether they are leased or have an open lease.
2. Cash rent distribution depends on the timing and terms of the sale.
3. Tax considerations play an important role in deciding how to handle cash rent.

For expert advice and tailored strategies to sell your leased farmland, contact David Whitaker – Iowa Land Guy today!

David Whitaker | Iowa Land Guy