Timber/Forestry 1031 Exchange
Does anyone have experience willing to share using timber land in a 1031? I am curious to how it could potentially be advantageous to someone looking to simplify their portfolio.
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@Sam Caldwell The state involved is going to have an impact. But there could be several levels on which a 1031 would work. Simply buying timberland to hold as a 1031 replacement if fine. Just like buying any other kind of agricultural land and then leasing the land to farmers/timber harvesters.
In the past timber deeds or long term leases to harvest timber have been separated from the land deed itself. Not a contract to cut. But a right to cut structured as a deed in perpetuity or a 30 year land lease. In this event the timber acts much like oil and natural gas in how they are used in 1031 exchanges.
- Dave Foster
@Sam Caldwell Did you end up pursuing timberland? I'm a registered forester and have many personal thoughts on the current timber market. Just curious how you landed on timberland.
@Jeff Dawson I'd like to get your opinions on NC/SC timber stands in the 50-100 acre size. I'd like to get your overall view of the current market conditions. I plan on harvesting part of a lower-quality 86-acre parcel in Hallsboro NC and some smaller (35ish) immature parcels scattered about in NC. Alas, I sold our parcels in Dillon and Marion (northern SC inner coastal counties) but am keeping an eye on stump price market thinking that someday it may rebound. It seems like I may be mistaken, in NC at least.
@Chris Martin sorry for the delayed reply. I can't speak much about that part of the world but down here in southern SC and down into GA the pulp and saw timber markets are terrible with no end in sight. For us it has been like like for 10+ years with the exception of a short lived pulp price increase in 2016-17. There are definitely pockets of higher prices, especially saw timber. Don't know your market or what the stands look like but if it were me I would let stand health and your goals dictate the harvest schedule. Here having a dry hill to sell during really wet times is about the only way to know you'll get somewhat of a premium. I could go on all day about it but hopefully this help. Shoot me a message if you'd like to chat more.