Dale Swanson acknowledged it was a very high price to pay for farm ground, but he considers the investment to be worthwhile. "This is very good land," said Swanson, who will farm it with his son. More than 150 farmers and others interested in the sale packed the Nevada Senior Citizens Center on the afternoon of January 4 to witness the bidding. The sale generated heavy interest, not only because of the land's high quality. People who attended the sale were also curious about any economic after-effects that may be lingering from the "fiscal cliff" deal, which extended the capital gains tax at 15% and the estate tax exemption at $5 million.
There is more confidence among potential buyers of land now since Congress has extended the tax laws
Farmland Realtors had reported a record rush of sales in the final few months and weeks of 2012 on fears that Congress might let the tax breaks lapse, possibly dampening the attractiveness of farmland as an investment. Had Congress not passed the bill, the estate tax exemption would have dropped to $1 million and the capital gains tax could have risen to as high as 23.8%. It will rise to 20% for families with income above $450,000 and individuals above $400,000.
Last October, Iowa broke its old record for highest farmland price with a $21,900 per acre sale in Sioux County. Sales of $15,000 or more have been common.
The sale of the land for $17,000 per acre at Nevada on January 4 was expected to attract strong bidding, considering the land has an excellent corn suitability rating of near 90. A rating above 70 generally indicates good quality land. "This is exceptionally good land," says Randy Hertz of Hertz Farm Management at Nevada, who attended the sale.