I'm planning on selling farmland and purchasing more.
I believe you are talking about a section 1031 transaction. Such transactions are exchanges and not reinvestments. So, if you sell one property and receive the money, you must pay tax on the capital gain. If you are planning to reinvest the proceeds, you can work with a 1031 exchange agent. You give your property to the agent. The agent sells your property and then uses the proceeds to acquire another property. That second property is then exchanged back to you.
You must set up the 1031 transaction in advance. However, there are timeframes in which you can identify (45 days) and close (180 days) on the second property subsequent to the sale of the first property. I have provided a link a section of the IRS.gov website that discusses Like-Kind Exchanges. That link also refers you to IRS publication 544.
Structuring such a transaction requires advice. You can find 1031 intermediatires simply by Googling "1031 Exchange". Or, use a tax attorney experienced in doing the paperwork on such transactions.
Marty Davidoff, firstname.lastname@example.org, 732-274-1600. This answer is provided for general information only. You should seek advice from an attorney or tax professional.
Mr Davidoff offers excellent insight into the rules in this area. The point is that you cannot just sell a property and then reinvest. You must either swap one real estate property for another "like kind" simultaneously or you can do a deferred like kind exchange. In the latter you must use a qualified intermediary who holds the proceeds of the sale of your property and then acquires the replacement property for you. There is also something called a "reverse like kind exchange" or Starker exchange which allows you to acquire the targeted real estate first and then sell your real estate. Do not even attempt to do this without a tax attorney assisting you as these rules are tricky and technical.
Hope this helps.
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I agree with the other two answers and would add that you really need to get expert advice on doing a non-taxable like-kind exchange under Internal Revenue Code section 1031, particularly because any equipment or other property that would go with the old farmland may give rise to taxable income even if the exchange of the land itself is non-taxable.
There are also a number of different ways to accomplish a valid 1031 like-kind exchange, including methods for allowing you to have the new farmland acquired for you by a qualified intermediary before you find someone who wants to acquire the old farmland you want to get rid of. There are a number of different rules and requirements for these exchanges that must be very carefully adhered to or the entire exchange becomes taxable. You must absolutely not engage in any of these exchange methods without having competent representation.