Selling Cows To Buy Land

[sheep&cows&stuff]

Some advice needed. Or rather, opinions

Have told my background story on here before, so wont repeat myself..

Situation is I put up a cattle shed last year (only completed in Nov) which cost me £50,000. The funding came from my day job as farming is not yet making me any money.

Anyway, I knew as soon as I made a large investment that some land would come up for sale - in typical fashion I was right!

I have been offered the chance to increase my owned acreage by around 25%. (Less than 15 acres). I rent some land off a retired couple who have children (none of which want to farm) and they approached me about buying 1/4 of the land (separated by a road) off them on the quiet.

I will not borrow to fund this purchase as my wages are already taken up with mortgages / loans / insurance etc. However, I cannot turn down the opportunity as land in my area has not come on the market in the last 20 years and if I decline to buy the 1/4 share of the land when the time comes that they want to sell the 3/4 share (that time will come) then the will count me out as I could not buy the smaller share.

Anyway, I have decided to sell all the cattle to fund the land along with some cash I have saved. I will start from scratch again (was considering filling the new shed with Friesian bull calves and rearing to bull beef under 16 months old). Cheapest way to get back into stock.

I would not rent out the shed as I could not stand seeing a brand new shed wrecked by someone careless. I Will bale the grass and sell as round bales until I need them again.

Deal has not been done yet as they have not came back to me with a price. I have a limit in my head which is more than it is worth so should not be a problem.

There are close by neighbours that would buy it in an instant should I decline.

Such a pity to finally have everything I need to suckler farm on a green field site and have to sell all my cows! But that's life haha

 

[goodevans]

Just watch the tax consequences,you may not like it it it may be better to borrow the money.l do agree with the starting over again though with the cheapest calves and working your way back up to gold

 

[Formatted]

Whats stopping you?

 

[quattro]

You can always replace cows at a later date,but you maybe won’t get chance to buy land later especially near hand

 

[sheep&cows&stuff]

Whats stopping you?

Nothing is stopping me - decision is made should the price align to my expectations. Just thought I would hear peoples thoughts! More brains pondering the matter = possibly something I haven't thought of!

 

[sheep&cows&stuff]

Just watch the tax consequences,you may not like it it it may be better to borrow the money.l do agree with the starting over again though with the cheapest calves and working your way back up to gold

If I sell the stock and purchase the land within the same tax year am I still taxable on the sale of the cattle?

 

[B R C]

Where are you, buy the land and just make hay to sell while your building back up?

 

[sheep&cows&stuff]

Where are you, buy the land and just make hay to sell while your building back up?

Northern Ireland - yes silage or hay. I have sheep also so ill not have too much grass.

 

[Roger Perry]

Nothing is stopping me - decision is made should the price align to my expectations. Just thought I would hear peoples thoughts! More brains pondering the matter = possibly something I haven't thought of!

I personally would keep your cattle operation going, but take out a long term loan on the land...........by keeping your cattle you keep the means to pay down your loan quicker.

 

[sheep&cows&stuff]

I personally would keep your cattle operation going, but take out a long term loan on the land...........by keeping your cattle you keep the means to pay down your loan quicker.

I would if I thought I could meet the repayments which at the minute I couldn't - just too much to pay back over the next 3 years to allow me any wiggle room unfortunately

 

[Roger Perry]

I would if I thought I could meet the repayments which at the minute I couldn't - just too much to pay back over the next 3 years to allow me any wiggle room unfortunately

I understand, just a shame to have to sell after building up the enterprise..............I guess I do understand that if you do not purchase the adjoining land then your chances for expansion are limited...........even so its' a tough spot to be in......kinda like having a gun to your head...Good luck to you.

 

[Nearly]

If I sell the stock and purchase the land within the same tax year am I still taxable on the sale of the cattle?

only if you make money on the sale.

 

[multi power]

For heaven's sake get it bought, before someone else does

 

[sheep&cows&stuff]

only if you make money on the sale.

Could you explain this for me please? Only if the amount from the cattle exceeds the price of the land?

 

[snarling bee]

Historically I wish I had bought more land instead of putting up more sheds.

 

[Nearly]

Could you explain this for me please? Only if the amount from the cattle exceeds the price of the land?

Only if the sale price of the cattle exceeds the value of the cattle on the books.
Check with your accountant.

 

[Smith31]

Just make sure before you sell the cattle that you have more than a handshake agreement on the purchase of the land.

Greed can make priests go back on their word, worse case scenario you sell your cattle and someone else beats your offer on the land, gazumping I think is the technical term.

 

[sheep&cows&stuff]

Just make sure before you sell the cattle that you have more than a handshake agreement on the purchase of the land.

Greed can make priests go back on their word, worse case scenario you sell your cattle and someone else beats your offer on the land, gazumping I think is the technical term.

I had thought of this. I trust them though and I think a handshake would secure. Can never be too careful though...

 

[livestock 1]

Could you explain this for me please? Only if the amount from the cattle exceeds the price of the land?

Whatever you have your cattle written down as valued on the books is the taxable value of your cattle. When or if you sell them you will be taxed on the profit between the two. I don’t think you can roll over the money into land from the cattle.

 

[snarling bee]

Don't let the tax 'tail' wag the strategy 'dog'.
ie don't let the tax issues stop what you want to do. Its not very often that tax is that significant that you have to change your mind.