Does taking a hunting lease on land you're holding break the strategy?
Land banking in its pure version is buy raw land, make no improvements, collect nothing, wait. Then almost every person I talk to who actually owns acreage mentions some small income on it. A neighbor farming it for hay. A hunting lease for a few hundred dollars a season. In one case a cell carrier paying for a small ground lease.
So I'm confused about whether income disqualifies it or just makes it better. The argument for staying pure is that the moment you have a tenant you have a relationship, a liability question, and someone with an interest in the property who might complicate a sale or make claims about use. Also small money can talk you into holding a parcel that isn't actually appreciating, because $600 a year feels like the parcel is doing something when it isn't.
The argument the other way is that the carry is the main enemy of a long hold, and if a hay lease covers the taxes then you can hold through a stretch where you'd otherwise sell out of pressure. In some states an agricultural use also affects how the parcel is assessed, which is a bigger number than the lease itself, and that varies by state so it's a question for the county assessor and your own tax professional.
I don't know where the line is. Where do you put it?
Small income on a parcel you're land banking
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