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USA | Most land is being bought in after tax $.
You either pay the income tax ahead of time if you got the cash @ the time of purchase or pay it after if you borrow.
My prediction there is a train wreck coming @ some point for folks borrowing most of the land purchase amount, as they will have a hard time cash flowing the amount of income needed to pay both the tax and required principal payment@ todays prices.
Couple examples if a person paid 40% in income tax, would require $10,000 per acre of income to pay for $6000 acre ground.
$15,000 acre ground @ 40% income tax rate requires $25,000 per acre in required income to pay for $15,000 acre dirt.
So on a $15,000 land purchase, a person has to generate on average $1250 per acre for 20 years to pay the required income tax and purchase price.
@ $200 acre profit requires 6 acres to pay for 1 over a 20 year period.
Kind of scary when you look @ the cold hard numbers, with the amount of income that needs to be generated over that period of time.
Edited by coup 8/26/2013 21:03
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Land Prices???
