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The Voices of Land blog

Get insight on current land trends and issues from experts across the land real estate industry.

24May

Land – The Original American Dream

Land has always been a staple of the American dream. From the Homestead Act of 1862 to the ongoing battle for Amazon’s second headquarters, Americans have held the desire to own and prosper from their own land close to their hearts. While owning private property today is different in many ways than land ownership in the 1800s, many of the same benefits still remain. Owning private property comes with a lot of hidden benefits that are good for you now and for years to come.

Before we dive into the benefits of private land ownership, let’s distinguish what exactly separates private property from public. Private property is land that is owned by individuals or corporations. The owner of a private property has the right of use, lease, and occupation over the land.

Public properties, on the other hand, are owned by public authorities. This land does not belong to any one person. That means the use and occupation of public land is decided on by committees and political groups instead of individuals. Owning private property makes it much simpler to decide what to do with the land. Let’s take a look at some other benefits of private land ownership.

Your Land, Your Choice

The most obvious (and biggest) benefit to owning private property is the freedom to do what you want with your land.  Of course, you still have to follow local and federal law, but how you use the land is largely up to you. This is a huge benefit if you’ve been eyeing some land as a potential transitional property. While sales can be extremely profitable, attempting them with public land can be difficult and can take years. Since public land doesn’t belong to one person, there will be lots of debates, meetings, and compromises over the best use of the land. There will be so many voices that yours might get lost.

Supply and Demand

Land is a limited resource. You can’t just create more land. That’s why land real estate in areas like California and New York are so expensive. There is only so much land to go around, and everyone wants some. Even when the market is bad, people will still need land to grow crops, raise livestock, and build homes.

In the current economy, you might not even be thinking about putting your private property on the market. Especially since owning property now can be seen as insurance against the next economic depression. Plus, keeping your land in good condition ensures that future generations will have a limited resource to profit on in tough times.

Long Term Increase

Historically, some investments in land have had better returns than the broad equity markets. Farmland investments averaged 10-13% total returns over the past two decades. It is also an excellent way to diversify your stock portfolio. Farmland values do not always mimic the market, so if other stocks plunge in value, you won’t lose all your money. People who invest all their money in a certain market or stock tend to risk losing it all when the market turns.

Tax Benefits of Private Property

Depending on the type of land you own, you could be entitled to certain tax benefits. For example, with vacant land, you can elect to add your expenses to your land’s cost bases. This will significantly decrease your taxable gain.

Here’s a great example of this theory in action from Inman.com:

Jean purchases a vacant lot for $10,000 in 2009. During 2009-2013 she elects to add $5,000 in carrying costs to the lot’s cost basis. In 2013, her adjusted basis in the lot is $15,000. She sells the lot for $20,000. Her taxable gain is only $5,000 ($20,000 sales price – $15,000 adjusted basis = $5,000).

Although private land ownership comes with tons of benefits, it has been on a slow decline for years. This is a result of many factors. Some people are wary of investing in land real estate after the housing crash of the early 2000s. Huge companies like Google gobbling up thousands of acres of land also doesn’t help. We hope this article inspires you to take advantage of the many benefits private land ownership has to offer. If you are interested in owning your own piece of land, make sure to Find A Land Consultant to assist with your purchase. Land transactions require the specialized expertise of an agent with education and experience in the field.

About the Author: Laura Barker is a Marketing Assistant Intern for the REALTORS® Land Institute. She graduated from Clark University in May 2017 and has been with RLI since October 2017.

About the Author

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