Discover Tax Benefits of Owning Land
Owning land in Nebraska is a strategic investment. From potential property tax relief to reduced rates on long-term capital gains, land ownership opens the door to meaningful savings and long-term financial advantages. Whether you’re a first-time buyer or seasoned real estate investor, understanding the tax implications of land can help you make more informed decisions.
Why Land Ownership Pays Off
Buying land isn’t just about open space, it’s about long-term value. Whether you’re purchasing for agricultural purposes, recreational purposes, or future development, owning land can strengthen your financial foundation in ways other assets can’t.
Unlike developed real estate, vacant land typically requires less maintenance and carries fewer overhead costs. Over time, land value tends to appreciate, especially in areas with strong growth potential like Nebraska. Plus, landowners can benefit from a range of financial incentives, from property tax relief to deductions tied to how the land is used.
When held for investment, land may also qualify for a tax deduction through expenses related to land management or improvements. And if the property generates rental income, owners may be able to offset their taxable income through depreciation deductions and other write-offs.
For buyers looking to reduce their ordinary income or diversify their household income, land can be a smart move, especially when paired with professional advice and long-term planning.
Capital Gains Tax Advantages
When a property owner sells land that has appreciated in value, they may owe taxes on the capital gain, but land held for more than a year qualifies for favorable long-term capital gain tax rates under the Internal Revenue Code. This means you could pay significantly less in taxes compared to ordinary income rates.
Even more powerful is the use of a 1031 Exchange, which allows you to defer those taxes entirely by reinvesting the proceeds into another real estate investment. This strategy is commonly used by real estate investors and sole proprietors to grow wealth while deferring tax liability. When managed properly, these advantages can help reduce your gross income, increase your pass-through entity benefits, and preserve more capital for future investments.
Long-Term Gains
Land held for over one year qualifies for reduced long-term capital gain tax rates.
1031 Exchange
Defer taxes on a sale by reinvesting into another qualifying real estate property.
Scalable Wealth
Use capital gains strategies to grow your land portfolio more efficiently and tax-smart.
Other Tax Benefits of Owning Land
The tax advantages of land ownership extend beyond capital gains. As a property owner, you may qualify for several ongoing benefits that reduce your annual tax burden and increase the overall return on your investment.
For land held for business purposes or income generation, you can often deduct investment expenses like maintenance, improvements, or operational costs. These may qualify as a tax deduction under the Internal Revenue Service (IRS) guidelines, especially if the land is used to produce rental income or is part of a pass-through entity.
Owners of agricultural land may also benefit from state and local programs that reduce the land’s market value for taxation. In Nebraska, for example, qualifying land may be eligible for property tax relief through special use valuations or a homestead exemption, depending on how the land is used and the household income of the owner.
In certain cases, placing land under a conservation easement, which limits development to preserve natural resources, can result in a charitable donation deduction and even long-term tax credit opportunities.
Finally, when land is passed on through an estate, heirs often receive a “stepped-up” land value, which can lower future capital gain liabilities, making land ownership a smart strategy for generational planning.
Tax Advantages for Business & Agricultural Use
If you plan to use your land for agricultural purposes, ranching, leasing, or another form of income generation, there are even more opportunities to reduce your taxable income and maximize returns. The IRS allows a variety of tax deductions for land used in these ways, which can be especially valuable for anyone operating as a sole proprietor or part of a pass-through entity.
Expenses such as fencing, soil improvements, clearing brush, or installing irrigation systems may be classified as business purposes and deducted accordingly. Buildings like barns, sheds, or grain storage facilities may qualify for a depreciation deduction, spreading the cost over time to reduce your ordinary income.
Additionally, Nebraska landowners may be eligible for programs that offer property tax relief or special valuation for agricultural land, lowering the assessed market value used by the county assessor. These programs help make land more affordable to operate year after year.
Whether you’re generating rental income, growing crops, or simply holding land for future development, it’s important to consult with a tax professional to ensure you’re taking full advantage of every income tax credit, unused credits, or benefit allowed by the Internal Revenue Service.
Work With a Land Expert Who Understands Tax Strategy
At Lashley Land, we believe owning land in Nebraska should be both rewarding and financially strategic. That’s why we go beyond listing properties — we help you understand how to buy land with long-term value in mind, including how to take full advantage of every possible tax benefit.
With deep roots in Nebraska and decades of experience, Lashley Land brings unmatched local knowledge to every transaction. Whether you’re investing in agricultural land, planning for a primary residence, or buying for recreational purposes, we help you make smart decisions that support your goals — now and for the future.
Our team will help guide you through topics like property tax relief, conservation easements, and the potential for income tax credits or depreciation deductions. We’re here to make the process clear, approachable, and beneficial at every step.
When you work with Lashley Land, you’re not just buying property — you’re gaining a dedicated partner in your Nebraska land journey.
Testimonials
What Our Customers Say
Fionn Downhill
“Lashley Land were an excelent choice to help us naviagte the North Platte real estate market. We are from out of town and their diligence and service was greatly appreciated. They took care of everything for us and it was hassle free. ”
Jason Gibbs
“These folks know their stuff! From residential to farm, ranch, even recreational properties, Lashley Land is there for you with personalized service. ”
Jill Pelster
“Jordan Maassen was extremely helpful in getting our acreage sold. Lashley Land created a wonderful brochure of our property and did a great job of reaching potential buyers… ”
The Lashley Land mission is to provide you with the highest level of professional service and satisfy your expectations with a positive and seamless experience in the selling and buying of your property.
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FAQ
Frequently Asked Questions
Can I deduct expenses on my land?
Yes — if your land is used for business purposes or as a rental property, you may be able to deduct a range of investment expenses such as maintenance, improvements, and management costs. These deductions can help reduce your taxable income.
Do I need to earn income from the land to get tax benefits?
Not always. While many deductions apply to income-producing land, some benefits — like those related to a conservation easement, homestead exemption, or property tax relief — may be available regardless of whether the land generates rental income or additional income.
What’s the biggest tax advantage of owning land?
For many buyers, the most impactful benefit is the long-term capital gain tax treatment. If you hold your land for more than a year, you may qualify for significantly lower tax rates when you sell. Pairing this with a 1031 Exchange can allow you to reinvest without paying taxes immediately, preserving more of your gains.
Who determines the taxable value of my land?
The county assessor evaluates the market value of your property annually, which directly affects your property tax bill. If your land qualifies for agricultural purposes or a homestead exemption, you may be able to reduce this assessed value and lower your taxes.
Should I consult a tax professional before buying land?
Absolutely. Every buyer’s situation is different, and working with a tax advisor can help you understand how land fits into your overall financial picture, from your gross income to your potential personal itemized deduction, depreciation recapture, or unused credits.