Family Farm - A Question

[Deerherd]

While we are on the tax subject, find out what the property taxes are. The county where I live in NY has the dubious distinction of of having the highest taxes in the whole USA per thousand. (We bounce between first and second, last year we were first!)

I have 77 acres and a very modest house built in the early eighties. My land is assessed @ $2100 per acre, house is assessed at $149,000 and my property and school taxes are $9800 and change which is around $820 per month. The taxes are higher than the mortgage!

I have two young grand kids I would like to see take over the place in 20 years but I'm sure the taxes will put it out of their reach. It will cost me over $200,000 just in taxes over the next 20 years at the current rates, which only ever seem to go up.

Make sure you figure that in your equation, you may find it makes a much better financial decision to start a new family "legacy" farm/ranch in the state your in.

Good luck and writing that out has got me depressed! (No wonder there's a mass exodus out of NY to other states!)

 

[texasjohn]

OldMcdonald, you're amazing...an international tax expert in our midst!! Better than crosswords, I hear!!:thumbsup:

 

[EddieWalker]

I don't see any problems with owning the property and keeping it in your family. It's land, and land has survived for millions of years without anybody messing with it, so there isn't any reason why it wont survive with you so far away. Even if you never go there the rest of your life, it will still be there for you to give to one of your kids to keep it in the family.

Eddie

 

[zing]

Some thoughts based on my experience being in a vaguely similar a situation to what you are proposing. 8 years ago my wife and I bought a 45 acre property about 2 hours from our house in the city, the differnce is that this is not family land so I will keep the emotional side out of it, since that is different for everyone anyway. We have horses that we board near our home, but we trailer them to our farm when we spend time there. My wife rides, my daughters ride and compete in equestian events so that is a part of our interest in the property. I know a number of others who have a country home as well though, for various reasons. Some family farms, some properties they have purchased. I won't tell you to keep iot otr not, but here are some things that may not have occurred to you.

- Everyone who is saying that there will be a lot of work involved in caring for it yourself is correct.
- If that doesn't appeal there are other options though. A few people I know post their properties on various websites as vacation homes. The properties are rented on a weekly basis to people from all over who want to get awayu to the country for a week here and there. THere are agencies that take care of the rental details, and people are hired to maintain the property (mow lawns, fix issues around the house) and cleaning staff that prep the place for rentals and clean up afterward. No one gets rich from this, but they cover their expenses like taxes, insurance, land maintenance and heat/electricity. They also ensure the place is available an not rented for the times taht tehy want to go with their families.
- Another option is to consider other features of the geographcal area at times other then when you are going to want to be there. Some people I know rent their place out for a month at a time during hunting season. Duck season, bow season, deer, etc. There are people who will want to be able to visit on weekends and then also take a week or two of their vacation as a hunting season base camp. If there is a ski hill nearby, you can rent the winter season to people who will want it each weekend for the 10-12 week ski season. If you do not want to be hands on yourself, there are always agencies that can take care of the details, or often there may be a retired couple nearby who would like to supplement their income by looking after the periodic upkeep of the property for your renters. You get the place looked after and they get some much needed financial help. They may also be the most contientious caretakers you will ever find.
- I personally have over 20 acres of hay fields that I could never maintain on the weekends/vacations that I am there, so I have a local cattle farmer that cuts, bales and takes it away. He gets hay for his cattle, and I get my fields maintaind so they do not turn to goldenrod and alders. I also have a couple of large buildings that I let locals store some equipment in, and in return they keep an eye on the place and my equipment, and they word gets around that the place is not abandoned or a free-for-all to anyone who may get the wrong type of thoughts. Give some thought to the property and what might appeal to other locals, so that you might have a bartering chip to help you keep the place safe.
- A bit of effort and imagination to see the potential value of the place may help you to cover some or all or your expenses or labour, at least for a few years so you can see if you and your southern belle really want to live there, or if one of your childrem may want to turn it into a horse property, a small orchard, or whatever. At the least you can buy yourself some time to see what develops. There will be nothing lost and you may have everything to gain.

 

[JamesHW]

My experience may relate to some. We have an 80 acre rural property that was a farm once but fell fallow over the years and was used as a summer retreat by the family from around 1905 on to the present day. The last year the field had a crop was in the late 60's. My mother could not maintain the property and years ago approached us siblings for assistance with the back taxes. Everyone pretty much declined except for my wife and I so we stepped in to help pay off the back taxes and over time completely took over financial responsibility for the land and house, but my mother retained the right to use it for her vacations. At some point about 7 years prior to her death we had a lawyer draw up documents to have my wife and I put on the deed to protect our interests, so technically we only inherited part of the property. Taxes are high, but since the property is unencumbered by any mortgage we pay them and visit the property when we can which is usually twice a year for a few weeks. It is an 8 hour drive and I pay a local fellow to mow the grass around the house every now and then to keep it presentable. I purposely maneuvered our situation away from sharing with siblings since I did not want to have to get permission to do anything and in any event they did not want to put any skin in the game. The family will be welcome to visit and we may well leave it to their children as we have none of our own.

Fortunately my spouse has grown to love the place as much as I do (she grew up spending summers working at a modest resort in the Catskills her mother ran), so the idea of vacations there instead of on a beach somewhere appeals to her, especially since we can bring the pets along and when we get there, despite the long drive, we are home. We are planning on retiring there in a few years, and by retire I mean transitioning to new projects, some agricultural, that may bring us some income. To qualify for AG tax breaks in New York State I believe you need to gross 10k a year and that seems doable, especially if forest products can be included. Lots of ideas and I am eager to get started. Fortunately my local roots run deep and I have some childhood friends I am still close to and my family is known to local old timers.

It is a nice old house, but currently has no heat to speak of nor any insulation (the cast iron stoves in the upstairs bedrooms were removed early in the last century) so we are planning on building a modern structure nearby and renting out the old historic house during the summer.

It has not been easy having a second home at distance. Worrying about the place all the time. Needing to keep a whole second set of tools there since I don't have room to drag everything along has been an added cost, defrayed somewhat by DIY savings over contractors. No internet or cable TV when there (other than tethering our cell phones) since we don't want to add to the expense (this may not be considered a negative by some).

I suggest that someone considering this do research on the land to find out everything as to any liens, covenants, right of ways, etc. etc. and what the taxes are and any requirements. If an elderly person is transferring the property and then becomes dependent on the government for medical costs. etc., note that the property could be sought after by the state to defray the costs of that persons care. I believe the "look back" for this was increased from 3 to 5 years a while back. A good estate lawyer is best for advice on this front. Also, If my wife had not been on board (maybe not 100% at first, but close) and if my mom had not been willing to put us on the deed as we stepped up with financial support, it may very well turned out differently. We thought long and hard before taking it on to the degree we have, but are happy we have the place and treasure our time in the country.

 

[OldMcDonald]

OldMcdonald, you're amazing...an international tax expert in our midst!! Better than crosswords, I hear!!:thumbsup:

Being completely immodest, I will accept that I am amazing. I definitely am not an international tax expert though. From time to time I have been very knowledgeable about some of the taxes in countries I have lived. I have an accountancy degree from Australia, but always engage a Chartered Accountant to do my tax returns. It is impossible to keep up to date with regulations unless that is your full-time work. The only thing I know about US taxes is that 30% is withheld from my share of book sales, and whilst this is higher than my marginal tax rate in Portugal, the cost of getting around it is not warranted on the small number I sell.

 

[jlgurr]

Hey everyone, want to thank you again for all the viewpoints, perspectives, opinions, comments, and words of wisdom. Been putting a lot of thought to all the info posted over the past couple weeks and have come to realize this land is just not something I can add to my current load. Yes, it would have been nice to keep in the family and Uncle is not even 70 yet so it could be sometime before a disposition is necessary but for now I am not going to commit. Firstly because as one stated so well, it would become a working vacation every visit and a worry always on my mind while absent from the property. Hiring local caretaker would not be feasible either.

To sum it up, it's a decision that will keep a new load off my shoulders and wallet although my heart is somewhat saddened with the potential loss. But we live for the future not the past and my career has brought us too far south and planted too many roots to be happy moving back north. Not to mention that I have been here long enough now to be climatized and living that far north again would freeze me half to death.

Thank you all, sincerely.

Best Regards,
Jeff