Rising Farm Values Put Early 1031 Planning at a Premium

The latest national benchmark

USDA’s 2025 Land Values Summary placed the average value of U.S. farm real estate—land and buildings—at $4,350 per acre, up 4.3% from 2024. Average cropland value rose 4.7% to $5,830 per acre, while pasture value increased 4.9% to $1,920 per acre.

Those figures are national averages, not appraisals of a particular tract. Still, they illustrate why owners of long-held farms, ranches, and timber properties may face a meaningful taxable gain when they sell.

Why timing matters before a farm sale

A conventional deferred exchange must be structured before the relinquished property closes. If the owner receives or controls the sale proceeds, it may be too late to place the transaction into a qualified-intermediary safe harbor.

Early planning also gives the owner time to confirm who is selling, clarify debt and closing costs, and determine whether the next property will be owned by the same taxpayer.

• Contact the qualified intermediary before signing final closing instructions.
• Discuss estimated gain, basis, depreciation, and reinvestment targets with a tax adviser.
• Begin replacement-property research before the 45-day identification period starts.
• Coordinate with lenders early when the replacement purchase will require financing.

A market decision and a tax decision

Section 1031 does not determine whether a farm should be sold or what replacement property should be purchased. It can, however, preserve capital that would otherwise be used to pay current tax when all statutory and regulatory requirements are satisfied.

Owners should evaluate the real-estate merits and the tax structure separately, with the appropriate broker, attorney, CPA, lender, and qualified intermediary involved.