The Impacts of the Tax-Deferred Exchange Provision on Farm Real Estate Values

• Published in: Land economics Vol. 89; no. 3; pp. 479 - 489
• Main Authors: Dillard, John G., Kuethe, Todd H., Dobbins, Craig, Boehlje, Michael, Florax, Raymond J. G. M.
• Format: Journal Article
• Language: English
• Published: Madison University of Wisconsin Press 01-08-2013
• Subjects: Agricultural land; Assets; Economic models; Economic theory; Farms; Indiana; Land values; Like kind exchange; Prices; Property; Property values; Provisions; Real estate; Real estate business; State court decisions; Studies; Tax deferred privileges; Taxation; Taxpayers; Transaction costs; U.S.A; Value; Indiana; United States > US
• ISSN: 0023-7639; 1543-8325
• DOI: 10.3368/le.89.3.479

This study examines the effects of the Section 1031 tax-deferred exchange provision on agricultural land values. The provision allows taxpayers to defer taxation for relinquished productive assets if a like-kind asset is acquired within the allotted time of 180 days. The analysis examines a set of 3,580 farm real estate transaction from 55 agricultural counties in Indiana over the period 2003–2006. Hedonic price analysis suggests that properties acquired under a like-kind exchange are associated with a 1.32% price premium.