Sale of a portion of farm land

[kwalified]

A 1 participant plan owns a tract of land. The trustee is wanting to sell a portion of it and wants to ensure it is done properly.  I believe it is allowed as long as the proceeds are returned to the trust.  Would the remaining portion of the land get a new deed in the name of the plan?  Would any special appraisal be necessary?

[jpod]

I don't see the need for an appraisal.  Of course:  (a) it better not be a pt; and (b) the plan - and not the participant or the employer entity (if there is one) - must pay all of the expenses associated with the transaction.  

[kwalified]

Thanks for the response.   I don't foresee a prohibited transaction especially if there is only one participant in the plan.  The trustee wants to do this by the book.

 

[Bird]

3 minutes ago, kwalified said:

I don't foresee a prohibited transaction especially if there is only one participant in the plan.

I think the subtle reference to a PT was about selling to a family member.  Sometimes we get these innocent little Qs that are missing that kind of "oh by the way" info.

[jpod]

There can be plenty of other pt scenarios besides selling to a family member.  This is not the forum for providing a dissertation on the pt rules.  If you give us the important facts, unvarnished, perhaps someone can help you determine if there is or could be a pt involved. 

[Luke Bailey]

Re the form of transaction, of course there would be a deed for the portion of the parcel being sold that would go to the buyer and a new deed showing remaining portion owned by plan. Consult a real estate lawyer or perehaps title company.

[JamesK]

FWIW, I am not real estate lawyer, but I would be sensitive to how the deeds are structured.  It seems to me that only the portion being sold needs a new title.  A title search would reveal that the what remains is the original tract less the portion sold. 

The reason is that there can be transfer taxes on each deed and you wouldn't want to pay twice for the same property.  Different rules often apply to farm land.  As Luke said above, consult a good real estate lawyer. 

[Bird]

20 hours ago, jpod said:

There can be plenty of other pt scenarios besides selling to a family member.

Agreed.  Sometime after posting I thought that was too simple, thanks.