1031 Exchange for Farmland: Defer Taxes on Your Land Sale
2026-03-22 · 6 min read · Guide
What Is a 1031 Exchange?
Section 1031 of the Internal Revenue Code allows you to defer capital gains taxes when you sell investment property and reinvest the proceeds into "like-kind" property. Farmland qualifies as like-kind with other real estate.
Key Rules
45-day rule: You must identify replacement properties within 45 days of selling.
180-day rule: You must close on the replacement property within 180 days.
Qualified intermediary: A third party must hold the funds; you cannot touch the money.
Equal or greater value: The replacement must be equal or greater in value and debt.
Farmland to Farmland
The most common 1031 exchange involves selling farmland in one state and buying in another. For example, selling appreciated Iowa cropland and buying a larger parcel in Kansas or Missouri at a lower price per acre.
Tax Savings
On a $1M gain, a 1031 exchange defers approximately $200K-$300K in combined federal and state taxes. This capital continues working for you in the replacement property.
Our team analyzes data from USDA NASS & ERS to deliver accurate, up-to-date information. All data is verified and cross-referenced with official sources.