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Discussion Starter · #1 ·
Anyone remember an article, It was either Field and Stream or Outdoor Life, regarding purchasing land as a corporation or business to be used for hunting. The article had a step by step process. The issue was probably out within this year. I misplaced my copy. I probably could purchase a back issue if I knew the month.
 

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I did not read the article, but would like to. However, it is easy to set up a corporation and purchase land. However, because the new corporation you set up would have no activity for the last two years, you could not borrow money from a bank without a peronal guarantee. They will run credit checks on both you and the corporation. As part of the business you can lease the land to farmers and hunters alike. The only other things you will need to get a standard business owners policy for insurance on the business and land and pay taxes. You probably can have it farm assessed.
 

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Discussion Starter · #3 ·
Good info Cheese. Thanks. You seem to be have a good deal of knowledge on this area. Anyway we can correspond with more questions? Phone or e-mail?
 

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Sure I am a CFO of a Management Consulting and Real Estate Company. The Management company is located in NJ the Real Estate Company is located in CT. Also, we have some land companies up in CT. Just let me know what you need.
 

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Only problem with buying "raw: land: there is nothing to depreciate. You'd get the deductions for the mortgage and property taxes, but nothing else.

If you got a mortgage on the land and then leased part of it for farming purposes, you'd generate some cashflow; possibly enough to cover a good part of the mortgage.
 

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JB, You are correct with raw land there is nothing to depreciate unless of course there is a building on the property. However, what must be considered is the investment. With land costs steadily on the rise, one would only assume that they are going to continue to rise, and hopefully you will get a nice return on your investment in the future.
 

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True; cap gains in the future are always nice. I'm thinking cash flow right now for managing the financing.

By the way--am I right in saying that a corporation wouldn't get the same tax break on the sale of a property as an indivudual gets on the sale of a residence?
 

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This may be a dumb question but I am already set up as an S corperation. What else would I need to purchase land?
 

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JB, Right again C Corporations are taxed at a higher rate. With S Corporations, LLC and LLP all income or losses earned are passed to the partners on K-1's to be reported on their individual personal income tax returns. This actual increase the amount of Adjusted Gross Income and if you make over certain thresholds you lose tax breaks. Where as if you a C Corp you pay higher taxes but are protected a little more.
 

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Scrubby, first it depends what the business is set up to do. For example, if you have a heating and air conditioning business you would not want to purchase land under it. Unless it is for that business. My advice would be to set up a seperate business for the land. The most important reason is to limit you liability. One reason is if you get sued in one business, they can not go after the other business. You liability is limited in each of those businesses. You would need a standard business owners policy for the land holding company and make sure that the insurance company knows it is vacant and is used for farming and recreation. Once your business is set up and you have found the land the realtor or a bank could set up financing for you in the name of the business. You would need to provid the Federal ID of the business and articles of incorporation and/or partnership agreement. You will need to personally guarantee the loan. Lastly have the land insured.
 

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Thanks for the info Cheese, youve been very helpful.
 

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If you buy any ground will you let these guys hunt it.I bet some one would be willing to help post it.Make sure it hold Turkeys.
 

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Cheese;

If it is undeveloped land, you'd need LIABILITY insurance, right? What else could you insure for?
 

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Cheese, thanks for the info but I am confused a bit.
I am planning on buying land in Maine to eventually build a house on and retire to, do I need to set up some sort of corporation and keep the vacant land under it until I live there ? Or just insure it with liability ins ?
 

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JB, You are correct you just need liability insurance for vacant land. The only time you would need more insurance is if you had buildings on the property.
 

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Chris, no you do not need to set up a seperate corporation to buy land out of state. You can buy the land in your name and just insure it as vacant land. I know if you live in a state and buy land in the same state you can add the land to your own homeowners policy. Out of state you will propably need to get a different insurance policy for the land from that state. I was actually answering a question for Stronski about purchasing hunting land under a corporation. If you are setting up a club and charging money you want to set up a corporation to limit your liability. If it is just for you there is no need to set up a corporation.
 

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Discussion Starter · #18 ·
Does the difficulty in purchasing land change regarding loans, etc... if it was an individual purchasing the land versus a corporation. Would it be "easier" to purchase or obtain a loan if the land was used partially as a crop farm.
 

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Not really, it is easier to purchase land as an individual then as a first time corporation. But it can be done. When applying a bank will generally request two years worth of income tax returns. As a new corporation, the corporation will have no income or tax returns. That is why banks request a personal guarantee. You can buy land under your own name and insure it as such. I do not think obtaining a loan would be any easier if the land was to be used for farming. However, your property taxes would be less becasue the land would be farm assessed. It also would be considered a farm if it where all woods. The purpose to setting up a corporation is if you generally allow alot of guys to hunt your property, you want to protect yourself personally so you will not be sued. This applies if you are chargeing people to hunt your land. If you do not charge people to hunt your land, your liability is limited by The Landowner Liability Act.
 
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