Purchasing a ranch and farm comes with substantial research and planning, especially being in
unknown territory for the first time. With some preparation and knowledge of financial resources
to pursue, you can help your farm be successful within the first few years of operation.

The U.S. is growing with young farmers who are seeing the value in farming and agriculture.
The latest 2017 Census of Agriculture from the U.S. Department of Agriculture (USDA) stated
there were over 321,000 young farmers (under the age of 35) in the U.S. compared to 208,000
in 2012. It’s apparent this dream is more attainable in modern-day times than it was in the past.
Before you buy property, make sure you have considered these financial resources to help you
get started.

1. Farm Credit System (FCS)

First-time ranch and farm buyers often find it more troublesome when qualifying for a loan. Most
lenders or investors will want to see the marketing and sales plan you have as a farmer. In
general, it’s difficult to become financed when you don’t have a history of experience in owning
a business.

The FCS, or Farm Credit System, is geared toward farm buyers and operators under the age of
35 who have 10 or fewer years of experience. This type of loan can be used to pay for land,
livestock, equipment, general farm improvements, and more. Some FCS organizations also
offer crop insurance and tax services.

2. Grant Opportunities

Owning and operating a farm requires a significant amount of daily work with the help of
tractors, combines, and other equipment that can cost hundreds of thousands of dollars. With
government grants, farmers can gain funding to cover equipment purchases.

The Sustainable Agriculture Research and Education (SARE) is supported by the USDA and
gives grants that fund research and education projects in several areas. Some of the grant
funds can then be used to purchase new farm equipment. Along with this, they also offer many
grants directed at specific types of farms, so check to make sure you’re eligible.

3. Utilize Current Assets

You may not realize it, but certain items you already own can be a great financial resource to
kickstart buying a ranch and farm. Consider selling used farm equipment you no longer need, a
vehicle, or even renting out an extra garage space you might be using for storage. It’s a great
incentive to sell possessions that can supply you with sufficient capital before you apply for
loans.

During this time, it could be most beneficial to refinance any current debt you have to add
additional money to your budget. Your home could be the most valuable asset to refinance,
especially if you have equity built in your home. Refinancing your mortgage payments opens the
door to taking this equity from your home in a cash amount all at once to fund whatever you
need for your farm and ranch.

4. Tax Breaks

The government provides tax benefits for those who go into the business of farming. For the
IRS to grant you farm income and losses, they’ll need proof of your intention to make a profit
rather than it being a hobby. Costs involving maintenance or repair of your farm, as well as the
use of your home are deductible on your income tax return.

All states define farms differently to be eligible, so be sure to inquire with your local state
agricultural department to find out if your farmland qualifies for tax write-offs. You can also work
with a tax professional who specializes in farming and can maximize your eligible tax deductions
as well.

While you decide which financial resources are available and best suited for your property
goals, there are always more support systems to guide you. Don’t hesitate to talk to local
farmers within the agricultural community to gain insight, or talk with a professional real estate
agent
who can set you on the right path. You’ll soon be owning and operating your first ranch
and farm as though you’ve done it your whole life.


F&R Partners