Asset management or justification for toys?

MattJK

Member
First, I'll admit I may be flirting with politics or being off topic so I will understand if this post disappears....

It's pretty clear to me as an American and Illinoisan that taxes will rise, and that those perceived to have wealth are in for a rough ride. Most of us here will be perceived as wealthy.

My crystal ball says property taxes will rise, so I'm reluctant to invest in real estate or add taxable structures. I suspect rec land taxes will jump more than ag. So, I'd look for land where a tax jump is priced in, or something biased to ag.

With cash or stocks/dividends subject to taxation or confiscation, I'm a bit leery of what to hold, although there are good buying opportunities.

Does this make for a good time to invest in equipment? Obviously a poor economy will limit the potential contracting or rental income, but equipment seems rather hard to tax or confiscate even if found or declared.

Perhaps I just want a 299 and a no till drill. Curious what the rest of you think, not politically per se, but about how to manage assets to continue improving habitat and living the lives we cherish.

Any of you changing your strategy or allocation of assets?
 
An actual investment is something that is expected to go up in value. Anything with wheels is a depreciating asset and is not an investment from a financial standpoint. Now JB is going rape us all REALLY hard, but I wouldn’t stop investing in tried and true 401ks and Roth IRAs. Or budget and save for a toy if you can afford it.


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Good subject Matt and no it s not off topic. If we can't pay our taxes.......... our deer hunting land is history. My strategy is to keep the land in AG classification by meeting all requirements for such at all costs. Keep buildings to an absolute minimum number and value and build them to be classified AG if possible. Recreational classifications may give you more flexibility but few could possibly justify the kind of taxes today let alone what is likely in years to come in a recreational classification. There is of course no guarantee that AG classifications will even exist in the future but people will need to eat and farmers can't produce food if they can't afford land.

Equipment prices continue to rise dramatically but I wouldn't call them investments. However I am planning on a new tractor and feel that sooner is better in my case. I'm 70 so a new tractor may outlast me and my income is stagnant so buying sooner than later makes sense for me. Each of us is different of course due to age, income, equipment needs/property sizes and resources. If I were younger it also would have made sense for me to purchase equipment that I needed then if it were to be used for mostly business until it was written off as it would ease my income tax burden while I was producing income.

You are right to be seriously pondering the question you have brought up. As less and less people work for a living those that don't will have more votes and things can change quickly then. A final thought after all this rambling is to research the history of countries that have already gone thru what lies ahead for here to figure out a great strategy to come out still hunting deer thru it all.
 
An actual investment is something that is expected to go up in value. Anything with wheels is a depreciating asset and is not an investment from a financial standpoint. Now JB is going rape us all REALLY hard, but I wouldn’t stop investing in tried and true 401ks and Roth IRAs. Or budget and save for a toy if you can afford it.


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Totally agree on the depreciation notion which is also a tool to protect income. I'd use the equipment to strengthen the legitimacy of my own farm business by contracting out and reducing my use of rental or contracting in work.
 
Haha. This^^^^^.
Property taxes by themselves don’t mean squat when buying property. It’s your total taxation that you need to look at. Does your state have an income tax? What’s the sales tax? Gasoline tax rate? Fiscal health of your state? All of these are important in determining how to grow or protect wealth.
It’s also important to look at possible income generation from land and the value of your hobbies. What’s it worth to you?
I believe the bonus depreciation through the 179 deduction applies to used equipment this year, so, if you can make some money off your ag land , now might be the perfect time to buy equipment.


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You guys got me interested. I am a County Appraiser in Kansas. I started reading some of your property tax laws and it seems much harder to keep Ag status in IL than in KS. Our state always leans in favor of classifying land as Ag.
 
That being said, once you have those three under control, tax management is the key to keeping it. I’m very conservative about what I build, not only because of taxes, but maintenance as well.

I love fishing, but haven’t gone in a few years. I was making plans to build an enormous shed house to store a walleye boat, big traveling ice shack, tractor, parking space for my pickup (which I don’t have) etc.

I was looking at north of $230,000 for all that, plus an electric bill, bigger property tax bill. My land is worth $50,000 at best.

I started re-thinking everything. Love fishing, hate sharing. The idea to build a pond was presented to me. It was genius. Far more affordable, zero negative externalities dealing with public waters, bigger fish, ability to affect fish population, don’t need a $40,000 boat or $50,000 truck to pull it or $130,000 building to store it.

Same goes for food plotting. With some critical thinking, a guy can get rid of a ton of implements once thought required for growing a plot.

The exercise of figuring out how to DO what you want to do with less is simple at face value, but really out on your thinker and try some outrageous ideas.


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If you want to invest in your future wealth, your first step would be to leave the People's Republic of Illinois.
Honestly that's a big part of the bias towards equipment vs acres. I could take equipment with me if I decide to leave. But my job is here for now. Land prices are also falling. I think somewhat because of the exodus from the state and possibly somewhat in anticipation of more taxation.
 
Honestly that's a big part of the bias towards equipment vs acres. I could take equipment with me if I decide to leave. But my job is here for now. Land prices are also falling. I think somewhat because of the exodus from the state and possibly somewhat in anticipation of more taxation.
Don't forget your state, city, and teacher pensions are a ticking time bomb. I wouldn't want to be stuck with long term assets there once this thing gets touched off.

https://www.chicagobusiness.com/joe-cahill-business/pritzkers-pension-silence-speaks-volumes
 
To learn to manage assets, you must learn to kill 2 birds with one stone. See how I avoided buying a Bowflex Max Traniner......;)

Hnd31nTh.jpg
 
In Kansas, when a developer puts in all the new infrastructure for a new subdivision, they plant grass first thing and use triticale as a cover crop. Guess what? Until a house is built, it’s Ag... The rules are very lax. You Illinois boys should head this way. We could use some solid folks around here. We just elected a Dem Governor........


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Randon thoughts on investing;
PA has Act319-Clean&Green, enrollment takes away the ability to subdivide, takes your property taxes down to pennies on the dollar. And we don't have Chicago. Move to PA.
Land has always been a good investment, like gold you always have something tangible, and with population increases it will be in short supply.
Never stop saving/investing at least a little bit, 401K, mutual Index funds, etc.
The goal is to arrive at the end of life with no regrets, so buy the tractor and notill drill. And give something to the poor.
 
Randon thoughts on investing;
PA has Act319-Clean&Green, enrollment takes away the ability to subdivide, takes your property taxes down to pennies on the dollar. And we don't have Chicago. Move to PA.
Land has always been a good investment, like gold you always have something tangible, and with population increases it will be in short supply.
Never stop saving/investing at least a little bit, 401K, mutual Index funds, etc.
The goal is to arrive at the end of life with no regrets, so buy the tractor and no till drill. And give something to the poor.

The greatest thing we can give to the poor is to teach them how to fish, and how they can accomplish anything they want to, that is our best gift to the poor! To the weak and disabled through no fault of their own that is a different story.
 
Randon thoughts on investing;
PA has Act319-Clean&Green, enrollment takes away the ability to subdivide, takes your property taxes down to pennies on the dollar. And we don't have Chicago. Move to PA.
Land has always been a good investment, like gold you always have something tangible, and with population increases it will be in short supply.
Never stop saving/investing at least a little bit, 401K, mutual Index funds, etc.
The goal is to arrive at the end of life with no regrets, so buy the tractor and notill drill. And give something to the poor.

Good comments that align with my thoughts. Giving time as well as treasure covers Chainsaws sentiment too.

I'm thinking that land may continue to fall as Illinois implodes. As I haven't let up on 401k, funds or stocks, God willing, I'll be poised to pick up more acres for the same cash. Lots of great Midwestern states, but still hard to beat Illinois soils or deer. If only the corruption in Chicago could be purged....
 
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