Investment

Deferring Capital Gains When Selling Maine Land

Death and taxes are unavoidable but they can be delayed. The former by eating right and exercise and the later by employing the right strategy when selling your land.  If you are considering selling your land in Maine and will realize a large capital gain you may want to consider a 1031 tax deferred exchange, aka. Starker exchange.   Always consult with your tax advisor but be aware, not all CPA's have a comprehensive knowledge of the exchange process and the tax code involved.

One of the most common misconceptions is the term "like kind property".   If I sell my undeveloped land, I will need to replace it with another piece of undeveloped land, keeping with the "like kind".   NOT TRUE!!  The term "like kind" means "investment property" for "investment property".   If John Doe owns a 4 unit apartment building in Florida that has been used 100% as investment, Mr. Doe may exchange that property for a timber investment in Maine.

As with any topic, you will find tons of information on the internet regarding 1031 exchanges. One company that has been around for years is Asset Preservation.  Their web site can be found at http://apiexchange.com and you will find a lot of useful information.  Once on their site, click on the button "1031 Repeal Issue".  This will allow you to send an email to your Representative asking them not to repeal section 1031 of the IRC.

Even if you never have any intention of using a 1031 exchange, the buyer for your property may be involved in an exchange. This type of buyer is motivated and must meet a stringent time table to comply with IRC.

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Investing in Maine Timberland

A friend asked me today if Maine timberland is a good investment. I think it is and invest in it myself.  For me, there are many reasons for doing so.

I became interested in timberland because it has been a proven investment for many of my clients and other family members. I have witnessed well managed land provide periodic returns of stumpage while the land remained well stocked with trees for future harvest. As an investment, one of the key features of timber is the ability for the owner to leave trees on the stump to grow and move up to a more valuable product class. Unlike other crops, if markets are not good, trees can be left for a later harvest when markets improve.  Additionally, with a number of other potential uses, land values over time usually continue to rise.

 

Managed Clear Cut

Managed Clear Cut

 

I would also credit forestland for helping to improve my mental health. Spending time in the forest I own has a relaxing effect on my mind.  Doing the physical work of timber stand improvement not only helps increase the value of my woodlot, I find it the perfect stress reliever as it lets me forget about the complications of our modern world.  Improving land of any kind gives me and most others I know a great feeling of accomplishment.

As a hunter, owning timberland gives me the ability to help our local game animals by managing areas for them. New growth from a harvest provides a desirable food source and cover for many of our favorite species like ruffed grouse, woodcock, rabbit, whitetail deer and moose. Areas left heavily wooded will provide good winter cover for those same animals.

The State of Maine gives a landowner a better chance at the any deer permit lottery. Any private landowner is eligible for the landowner permit drawing if the person owns a particular piece of land that is: 25 or more contiguous acres in size; is agricultural, forested or undeveloped land; and open to hunting, including hunting by permission. Any dependent living in the household of a qualifying landowner is eligible.

Maine has another benefit for timberland owners. The tree growth tax program is a special tax status available for owners who agree to manage their lands the commercial harvest of the forest. This reduction in property tax is the reward for the landowner to properly care for the forest and provide the raw materials that support our forest products industry. The requirement to have a Maine licensed forester provide a management plan also ads value to the ownership.

Timberland is a great asset that can provide you with cash returns, pride of ownership and recreational pastimes; it is also a potential legacy for your children and grandchildren. Properly managed forests have historically supplied generations of owners with all of the above.

If you are interested in learning more about timberland investing, United Country Real Estate's timberland specialty property group has an informative free E Book written by Eric J. Holzmueller PhD.  Eric is a forester and one of United Country's many licensed foresters who are also land brokers. You can download the free book at http://investintimberland.com/

Coastal Timberland Investment Near Belfast Maine

 

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Downtown Belfast, Maine

 

Anyone looking for a reasonable investment in coastal Maine land should consider the Belfast area a great place to start. You can find land here for timber/recreation as well as development use. Prices will vary greatly depending on the size of the parcel, its proximity to the shore and many other factors.

One of the big attractions to many of the small Waldo County towns is the close proximity to the Coast and Penobscot Bay. Belfast is one of my favorite small cities in Maine. It is not as well known as Bar Harbor and Rockland but that is not a bad thing.

 

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Boardwalk Along Belfast Bay

 

Belfast has a great downtown area with small specialty shops. One of my favorite don't miss spots is Rollie's Pub located at 37 Main Street. The atmosphere is energetic with staff and locals who are Maine friendly. After a meal at Rollie's a short walk down to the town board walk along the bay will help burn off a few French fries. The boardwalk and public park area on Belfast Bay is a great chance to see some impressive yachts in harbor.

 

Swanville 103 +/- Acres

Swanville 103 +/- Acres

 

Peter and I listed a gorgeous 100+ acre woodlot in Swanville this week. The weather was beautiful for a snowshoe but the snow conditions were not. Anyone who snowshoes knows how much fun three feet of fresh powder can be. A little sun, wind and warmer temps should improve the conditions for this winter activity. This property located on Oak Hill Road has some nice timber, a long access driveway and a partly constructed home/cabin in need of some TLC and good carpenter skills. There is an existing well, septic and concrete pad for a garage. Power has been run onto the property. It is just 5 miles from the property to downtown Belfast!

If you own a home in town and have been looking for a place to hunt, hike, cut firewood or invest, you should look into this new listing. Call us to if you want to see this property this winter. If you need more information click the link here for more details.

Property Information Package - Oak Hill Road Swanville, Maine

 

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Unfinished building near end of driveway

 

 

 

Buying Maine Land With A Self-Directed IRA

If you are like many of our customers concerned with having all of their retirement investments tied to the stock market you may want to look into a self-directed IRA. With a self-directed IRA you will be ready to act when you find that Maine land for sale that you know is a good investment.

What is a self-directed IRA?

The Individual Retirement Account or IRA has been around for many years as an incentive for individuals to save money tax deferred for their retirement. A self-directed IRA is simply an IRA that gives you complete control over what you invest in.

What can you invest in?

Unlike most IRA's offered by banks or custodians the self-directed IRA can be used for nontraditional IRA investments like real estate, notes, precious metals and many others. Maine timberland, farmland, land with development potential, waterfront and more could be a great diversification to you investment portfolio.

Pros

The best benefit of the SDIRA is the ability to have control over what you invest in. No one cares more about your retirement than you do. You can invest in what you know instead of letting others have control of your future. You can partner with friends and others on new investment opportunities. Your investments will grow tax deferred.

Cons

All investments have risk and a self-directed IRA will require you to do your own due diligence to mitigate risk.

Because this type of tax deferred account could have a lot of potential tax advantages for you the IRS has a lot of rules that need to be followed.

Is it right for you?

You will need to decide if the ability to control your own destiny is something you are comfortable doing. If you do not have time for researching your own investments you may want to stick with a traditional IRA. If you are one of a growing number of individuals concerned with the course of traditional banking and investing, the self-directed IRA is worth a look.

 

How To Choose A Logger

Is it time to harvest your timberland in Maine? If so and you do not have the experience, equipment or desire to do it yourself, do you know how to find someone to do the harvesting for you?

Choosing a logger is a very important process in the management of your timber investment. Done properly, harvesting will pay a return on investment with competitive stumpage checks, improve the growth of the remaining trees, protect sensitive areas, provide habitat for game animals, open views and possibly make road improvements. An improper harvest may do just the opposite of the above. So how do you go about finding a logger you ask?

If you have a forest management plan you should start with your Maine professional forester who prepared your plan. He or she should know some reputable loggers who they could refer to you. Once you have a couple of names ask some questions.

  • Ask for references from other land owners that the logger has worked for. Call them and ask how the job turned out.
  • Ask for their certifications. The better loggers in Maine will have been through the Certified Logging Program (CLP) or the Master Logger Certification (MLC). Both of these credentials show that they have some working knowledge of proper forestry and safety techniques.
  • Ask them to show you that they are insured for workers compensation in case of an accident. You do not want an injury on your land to become your problem.
  • If you can, visit a couple of their past jobs sites to see how they left the land.
  • Once you have decided on a contractor get a signed contract for the job. This will give you and your logger have a clear understanding of how the job will be done and what and when you will be paid for your trees.

If you get an unsolicited offer in the mail or over the phone be cautious. That logger may or may not be good at what they do, to be sure use the above questions.

As always I would recommend that your independent forester be part of the process. Their assistance in the process will most likely pay dividends for the future of your forest.

For more information on timberland see http://investintimberland.com/