This process preserves traditional 1031 exchange tax benefits while also providing the investor with MACRS bonus depreciation benefits. This bonus depreciation allowance is 40% for assets placed in service during 2025, enabling investors to deduct 40% of the asset’s cost upfront, with the remaining balance depreciated over its useful life. This initial depreciation obtained from the transaction is substantial and can be used to offset ordinary income.
Our Business Purpose: Converting Conventional Land to Organic
The core mission of 1031Max’s LandBank is the conversion of conventional farmland into certified organic farmland. This process benefits investors, farmers, and the environment by:
- Boosting Rental Income: Organic farmland can command rental rates up to 250% higher than conventional farmland.
- Increasing Land Value: USDA-certified organic land appreciates by 25-35%, significantly enhancing long-term investment returns.
- Sustainable Impact: Only 4.9 million acres of farmland in the U.S. are certified organic, representing less than 1% of total agricultural land.
How 1031Max’s LandBank Works
Our 1031 LandBank Cooperative offers a unique investment model that focuses on converting conventional farmland to organic certification, providing financial and environmental benefits.
- Membership and Units
- Investors purchase units in the Co-op, representing ownership stakes in the LandBank. Units in the Co-op constitute real estate under Colorado Law, ensuring compliance with IRS 1031 regulations.
- Investors can participate in their choice of farm conversion projects on their timeline.
- Strategic Land Acquisition
- We acquire underutilized farmland with high potential for organic certification, targeting regions with strong market demand and competitive rental opportunities.
- Organic Conversion Process
- Three-Year Transition: Following USDA guidelines, the land undergoes a chemical-free transition period during which sustainable farming practices are implemented.
- USDA Certification: After the transition, the land is inspected and certified organic, significantly increasing its value and rental potential.
- Revenue Generation
- Certified organic farmland is leased to farmers, generating higher rental income that is distributed to Co-op members.
- Quarterly Call Options
- Investors can exit their investment at quarterly intervals, providing liquidity and flexibility.
What Is a Traditional LandBank?
A LandBank is a strategic investment tool that focuses on acquiring and holding undeveloped or underutilized land for future use. Investors benefit from:
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- Land Appreciation: Over time, land values increase, making it a reliable asset class.
- Purpose-Driven Development: Land can be transitioned for agriculture, conservation, or commercial use to maximize returns.
- Tax-Advantaged Investments: Properly structured LandBanks can serve as replacement properties in 1031 exchanges, allowing for deferred capital gains taxes.
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Post-Closing Flexibility: Landbank Owners Have Multiple Options
We believe in giving investors ample time and flexibility to make informed decisions. Investors can
(1). Invest In a LandBank Deal
(2). Borrow From The LandBank; and
(3). Exit On Your Own Terms.
After closing, investors have up to three years to participate in our organic farmland conversion projects or explore other investment opportunities within the Cooperative.
Landbank Benefits:
- Reduced Pressure: Unlike traditional 1031 exchanges, investors are not forced into immediate commitments, reducing the stress of rushed decisions.
- Risk Mitigation: The guaranteed return of capital after three years ensures there’s no risk of funds being trapped indefinitely.
- Additional Tax Benefits: With an organic farm deal, the first-year depreciation benefits often surpass those available in other investment options, providing a compelling financial advantage.
