600 acres, sell or keep?

[Arbtech Tree Services]

Was asked today whether a 600 acre woodland (mixed hard and soft) would be better sold now or kept for another 20 years.

Who knows what the next wave of disease could be and when, will timber prices rise or fall?

 

So from a business point of view would you sell now or hang on to it?

 

 

 

Regards,

 

Steve.

[Richard 1234]

Depends if you want or need the cash I suppose. I would keep if possible as land will always rise in value

[Marko]

Wait until April 7th if you do.

[Marko]

From a business point of view I would always sell if the price is right. From a sentimental point of view it is always a tough call with woodland.

 

I am in the process of finalising a sale of a smaller plot at the moment and rolling it over into something much more productive. Slight regrets but life goes on.

[Duncansimpson]

A proper working wood is free from capital gains and death duties and any money you spend on it is tax deductible do I would keep it

[7610]

Keep it if you can.

[10 Bears]

On average, there is a 3% annual return on investment assuming steady land prices and no over inflation in the timber market, and low/no inflation in the economy as we are experiencing currently.

 

As stated above, the woodland investment attracts no income tax, capital gains on growing crops and offers 100% relief on inheritance tax.

 

The (perhaps) simplistic view is that there is a likely 3% increase on investment, plus roughly a 2.5% inflation hedge (ie the difference between expected asset increase and interest rates), leads to broadly 5.5% tax free.

 

This would be equivalent to an 11% return on normal taxable income, so with a clever tax arrangement where the owner also invests in a low correlation UK asset class e.g. property, they will receive a good return on their investment.

 

The only issue is that the investments are long term and ultimately to receive the investment reward, the woodland would have to be sold at some point in the future.

 

So, it will pay to keep the woodland if the owner can also invest in other sectors and offset tax liabilities, then sell the woodland at a later date.

[richy_B]

Depends a bit on where it is but if it was anywhere near me I'd sell it and never have to work again.

 

As the op has noted you never know what's round the corner, win or lose, so sometimes it's best to cash in your chips.

[MattyF]

I'd hang on to it , the price of land regardless of use or quality is permanently on the up it seems ... Unless you need to cash it in but as discussed above with the tax brakes associated with wood land its definitely making it more desirable as an asset, I also think there will be a shortage of timber in the future potentially making the crop more valuable.

[timbernut]

I agree with with what MattyF says, even though value may drop for a bit but long term all land increases in value. We bought 40acres in 2003 at 1800 an acre and is now worth between 4.5 to 5.5 k an acre. A lot can depend on age of 'crop' as well.

 

I'm pretty sure most woodland works are NOT tax deductible because of the other benefits (no one mentioned you don't pay tax on profit from the sale of round timber!)

 

Incidentally, that's a substantial block so why not sell part of the wood after assessing where there is a chance of a good return with minimal input harvesting wise. Seems win win that way