Sell Land with Hageman Realty

Farmland value depends on state, county, soil productivity (PI, NCCPI, or WAPI), tract size, road access, drainage, and current commodity market conditions. Purdue's 2025 survey put top-quality Indiana tillable ground at $14,826 per acre statewide, with West Central Indiana running $10,135 to $14,388. Illinois cropland averaged $9,850 per acre per USDA NASS, with top-tier ISPFMRA "excellent" tracts at $15,846. Wisconsin cropland averaged $7,250 per acre. Arkansas averaged $4,172 statewide. Texas rural land averaged $5,158 in Q3 2025. Hageman brokers can pull comparable sales for any of the 47 counties we serve, or coordinate a formal appraisal with an ASFMRA-credentialed rural appraiser when you need one for an estate, partition, or lender.

Most farmland sellers pay federal long-term capital gains on the difference between the sale price and basis. For 2026 the federal rate is 0 percent (income up to $49,450 single / $98,900 married), 15 percent in the middle bracket, or 20 percent above $545,500 single / $613,700 married. The 3.8 percent Net Investment Income Tax applies above $200,000 / $250,000 MAGI, though gains where you materially participated in farming may be excluded. State treatment varies sharply: Indiana 2.95 percent flat in 2026, Illinois 4.95 percent flat, Wisconsin offers a 60 percent exclusion on farm asset gains under Wis. Stat. §71.05(6)(b)9m, Arkansas excludes 50 percent of long-term gains with gains above $10 million annually fully exempt, and Texas has no state income tax. Depreciation recapture on improvements is taxed separately at up to 25 percent. Coordinate with a CPA before signing a purchase agreement.

A 1031 like-kind exchange (IRC Section 1031) lets you sell farmland and roll the proceeds into other real estate without paying capital gains tax at the time of sale. You have 45 calendar days from closing the sale to identify replacement property in writing, and 180 days to close on the new purchase. A Qualified Intermediary must hold the proceeds the entire time — you cannot touch them. Real estate is broadly like-kind: cropland can exchange into other farmland, recreational tracts, rental commercial real estate, or apartment buildings, as long as both properties are held for business or investment use. Many sellers combine 1031 with "swap till you drop" planning: defer through life, then heirs receive a step-up in basis at death and the deferred gain is erased entirely.

Under IRC Section 1014, property transferred at death receives a stepped-up basis equal to fair market value on the date of death. For farmland that has appreciated for decades, this can eliminate substantial embedded capital gain for the heirs. Step-up survived the One Big Beautiful Bill Act signed July 4, 2025 — earlier proposals to repeal it did not pass. If you plan to leave the farm to heirs who will then sell, step-up means they pay tax only on appreciation after your death. If you sell during life, you pay capital gains on the full appreciation since you acquired the land. For many landowners with high-appreciation farms held for decades, holding until death and letting heirs sell is the lower-tax outcome.

A typical farmland sale follows this sequence: get a comparable sales analysis or appraisal, sign a listing agreement (or auction agreement), prepare the property file (FSA 156EZ records, aerial maps, soil maps, drainage and tile maps, recent yield data, current lease and tenant documentation), execute marketing (drone aerials, print and digital listings, signage, open houses or land tours), receive offers or sell at auction, sign a purchase agreement, complete buyer due diligence (title work, survey, environmental review where needed), and close — typically 30 to 60 days after the agreement. Hageman brokers handle each step and coordinate with your CPA, attorney, and Qualified Intermediary as needed.

Each format has trade-offs. Auctions create urgency, competitive bidding, and a defined sale date — they work well for high-quality tracts in active markets, for estate sales with a fiduciary duty to maximize value, and for partition action court-ordered sales. Private treaty (broker-listed with negotiated terms) gives you control over timing and price, flexibility for non-price terms, and breathing room to coordinate a 1031 exchange around the 45-day and 180-day deadlines. Industry guidance: strong market favors auction, soft market favors private treaty. Hageman handles both formats and can recommend the right approach for your tract and goals.

Two main approaches. First, subdivide the farm into smaller legal parcels through your county and sell parcels individually — this requires zoning compliance, surveys, road access verification, and often county minimum acreage rules. Second, use a multi-parcel auction format where one event sells the farm in tracts that bidders can buy individually or as a whole. Schrader Real Estate's M3 multi-parcel system, widely used in the Midwest, can produce hundreds of thousands of bidding combinations on a single farm. Multi-parcel often returns a higher total than selling the whole-farm in one piece because it lets neighbors compete for the specific tracts they want. Hageman can structure either approach.

Renting keeps the asset, generates ongoing cash flow, and preserves the step-up in basis at death (which erases deferred gain for your heirs). Selling provides immediate liquidity, allows reinvestment via 1031 into other real estate or full diversification, and ends the management overhead. Renting also has tax implications: a cash-rent lease generally does not satisfy the IRC Section 2032A material participation test for special-use estate valuation (which can reduce the federal estate tax base by up to $1,460,000 in 2026), while a crop-share lease with documented landowner involvement often does. How you structure the lease matters as much as whether you rent at all.

Yes. Most farmland sales close with the existing tenant's lease intact — the buyer takes the property subject to the lease. State-specific notice requirements apply: Indiana, Illinois, and Wisconsin all have written tenancy rules tied to the crop year. Coordinate sale timing with the crop calendar so neither tenant nor buyer is disadvantaged. Disclose lease terms in the listing so buyers can underwrite the rental income or plan their own operation timeline. Hageman includes lease documentation in every property file.

It depends on the purchase agreement and the existing tenancy. If a tenant has a current crop in the ground, the tenant typically retains harvest rights for that crop year regardless of the sale — most leases include this protection. If you own and farm the land yourself, the standing crop is personal property and can be negotiated separately from the real estate sale. Selling the land mid-season while retaining harvest rights yourself is common in retiring-farmer transactions. Always document crop allocation in the purchase agreement so there are no disputes at closing.

Yes. Mineral rights (oil, gas, coal) and water rights are severable from the surface estate in most jurisdictions, and reservations are common in regions with active extraction or scarce water. Reserving rights at sale typically reduces the sale price because the buyer purchases only the surface estate. If you plan to reserve rights, work with a real estate attorney to draft the reservation language correctly — sloppy reservations can cloud title or create disputes years later. Properties with reliable water rights in drought-prone Texas regions command 15 to 25 percent premiums, so the trade-off between keeping rights and maximizing sale price matters most in those markets.

A typical timeline runs 8 to 16 weeks from listing to closing. The marketing period (drone aerials, listings, signage, open houses or land tours) typically takes 4 to 8 weeks. Once a buyer is identified, purchase agreement to close runs 30 to 60 days for cash or pre-approved buyers, 60 to 90 days when a 1031 exchange or estate transition is involved. Auction events compress the marketing-to-sale-date timeline because the sale date is fixed in advance — typical auction events run 6 to 8 weeks of marketing then a defined sale day with closing 30 to 45 days later. Estate sales, partition actions, and court-supervised transactions can extend timelines.