Advantages and Disadvantages of Buying Farmland

Buying farmland can be an alluring prospect to many, for a host of different reasons. Whatever your reasons may be; it's imperative to have complete knowledge of what you are getting into, because the legal processes are typically more complicated when it comes to purchasing agricultural land.

Depending on the state you belong to, there are certain laws that will prevent you from purchasing farmland, unless you can prove you have a background in farming, or own another plot of farmland. These laws are in place to protect the integrity of farmers, and to prevent complete urbanization of agricultural land in the country.

That being said, it is not impossible to own a piece of farmland. It depends on how you plan to utilize the plot. Read on to familiarize yourself with the pros and cons of such an investment.

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Advantages of Buying Farmland

Owning agricultural land can generate one of three main incomes; you can get income from selling the crops and produce, by leasing it out to a farmer, or from renting out a house built on it.

• Perhaps the one advantage that tempts people to invest heavily on agricultural land, is tax exemption. The profits you make from your farmland, will not be subject to wealth tax, which is a kind of tax typically levied on profits made from properties.
• You can also plant your own crops and apply for government grants, if you're ready to invest your time and energy. You can rent out your land to other farmers and share the profits, but that would depend heavily on various natural factors.
• You can opt to do crop sharing, and let someone else plant crops on your land. You can take a portion of the dividends as payment. This way, you can ensure that your land is also looked after. You can reap big benefits on the long run. You can receive tax credits, or even divide your land and sell it for a hefty profit.

Disadvantages of Owning a Farmland

• The major disadvantage would be, adjusting to the drastic change in lifestyle, since you'd have to move closer to your farmland, which is likely to be found in a rural area. Even if you do not, travelling regularly to your plot to ensure its upkeep will take up a lot of your time. Unless you have a trustworthy relative or friend staying nearby, you'll also have to invest heavily in protecting your land from encroachers.
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• If you plan on leasing out the land to a farmer, the profit you reap depends on the quality of the crops grown. Too many extraneous variables like weather and water supply, affect the produce, making for unreliable earnings.
• There are laws in place restricting the construction of a farmhouse or a holiday house on your agricultural plot. You'll need to be well versed with these additional laws in order to avoid legal hassles.