If you’re bringing farm or ranch ground to market, a simple pre-listing soil fertility test can make your property stand out and even become the reason a buyer chooses your listing over the one down the road.

During a recent episode of the National Land Podcast, Alec Bean and Karly Pavlinac from the Soil Tax Guys explained the ins and outs of IRS Section 180, a powerful tool that farmland buyers can use to potentially save money on their land purchases. 

Here’s what to know about Section 180 and how sellers can leverage these benefits to attract buyers.

What is Section 180 and How Does it Work?

Section 180 is a federal tax provision that lets a new landowner deduct the value of excess soil fertility already in the ground at purchase. In practice, a buyer purchases the property, gets a soil test to establish a baseline, and converts the surplus nutrients like phosphorus and potassium into dollars using USDA fertilizer pricing reports.

Buyers can then claim that amount as a deduction, similar in spirit to writing off improvements like irrigation or fences. The catch is timing, as Section 180 is a one-time opportunity with a small window. The soil test must happen after closing and before any fertilizer is applied. This point is crucial, as applying any fertilizer after the purchase is finalized exempts the new landowner from any potential deductions.

Why Test Before You List?

1. It Gives Buyers a Ready-Made Financial Upside

Section 180 lets eligible buyers deduct the excess fertility already in the soil after a purchase. When buyers can see credible test results up front, they can model their deduction and move faster on an offer. Buyers can also choose to receive their deduction in a few different ways (all-at-once, or divided over time), meaning Section 180 can be tailored to appeal to a variety of buyers.

2. It Differentiates Your Listing in a Crowded Market

Even buyers who aren’t familiar with Section 180 see a soil report as professional due diligence that reduces uncertainty. “Just taking a soil test… will put you above and beyond 50 to 75% of the other brokers out there,” says Alec. In a competitive market like we’ve been seeing over the past few years, presenting a completed soil test will not only help your listing stand out but also expedite the process of attracting qualified buyers.

3. It Signifies Well-Cared-For Land

Healthy test results often reflect good stewardship. High per-acre values often show up where owners have adequately cared for their land. Even where Section 180 deduction values aren’t extreme, buyers can still average around $500 per acre in deductions. Presenting credible test results up front reduces uncertainty and assuages concerns regarding cropland productivity.

If you’re interested in learning more about conducting a soil test on your property or would like to learn more about how Section 180 could benefit you, get in touch with your local Land Professional today!