How to 1031 Exchange Golf Courses and Practice Ranges into Mineral Rights & Royalties

1031 Exchange Golf Courses

A day out on the golf course is one of the most relaxing ways to spend a sunny afternoon. This is for a lot of people. A bad day on the golf course is always going to be better than a good day in the office. But what if the golf course is your office?

Owning a golf course, practice range, or a combination of the two can be stressful. Remember the managing the staff? How about maintaining the facilities? Moreover, policing the customers! Even the most passionate golfers may not be best suited to own the course.

Are you ready to sell the golf course or driving range? You can maximize the proceeds of your sale. This is by using a 1031 exchange to purchase mineral rights and royalties. With mineral rights, you can obtain a highly valuable property. From there, you can quickly go back to actually enjoying your time out on the green.

How to Sell A Golf Course or Driving Practice Range

There are many people in this world who dream of buying their own golf course. It is because golf is a sport loved by many for generations. Are you selling one or even are just selling a driving range? Then it is up to you to connect to these potential buyers and transfer the property’s ownership.

Driving ranges and golf courses can be sold on the open marketplace, just like any other piece of land or property. Although there are a few golf-specific resources available, real estate listings, online auctions, and even newspaper advertisements can be used to sell a golf course or practice range.

Determining the Value of Your Golf Facilities

For the most part, golf courses occupy large tracts of land with many different kinds of structures and developments throughout. In addition to the sum of the value of the course’s assets, any golf course that requires a fee can be considered a future revenue stream. Popular and profitable golf courses will obviously be sold at higher prices than those that require development or marketing.

The value of a golf course or driving range is determined by:

  • The Acreage
  • Property Taxes and Special Designations
  • Number of Existing Structure and Conditions
  • Number of Employees and Company Earnings
  • Membership vs. Public Designation
  • Maintenance History
  • Water Features
  • Sponsorship/Partners
  • And more

Add all of these factors up and golf courses can become a very valuable piece of property. With the identification of the right investor, the sale of a golf course, driving range, or combination of the two will likely end in a large sum of money being transferred between the former and new owners.

Taxes Paid on the Selling Golf Courses and Practice Ranges

Of course, before you start counting your money, it is important to remember that Uncle Sam, as well as many other local and state governments, are going to be entitled to a small share of the sale. Although it varies depending on your location, the following taxes are typically applied to the sale of a golf course or driving range:

  • Depreciation
  • Income Tax
  • Capital Gains Tax
  • Sales Tax
  • Local Taxes
  • Fees for Utility Transfer
  • And More

Selling Golf Courses and Practice Ranges with a 1031 Exchange

With a 1031 Exchange, capital gains taxes can be completely eliminated on the sale of a golf course or driving range. In order to do so, taxpayers must purchase a new, similar property while following a specific set of rules as laid out by the IRS. The new property must be of equal or greater value in order to completely eliminate capital gains taxes on the sale of a golf course.

Like-Kind Properties for the Sale of Golf Facilities

Golf courses, driving ranges, and even miniature golf courses can be sold and exchanged for many different kinds of properties. In order to qualify for a 1031 exchange, golf courses are usually sold with the intent of purchasing:

  • Mineral rights or royalties
  • Businesses
  • Vacant Land or Property
  • Farms
  • Leasing Portfolios
  • And much, much more.

1031 Exchange Timeline when Selling Golf Courses and Practice Ranges

As we mentioned earlier, a 1031 exchange is only going to defer capital gains taxes if the allocated timeline for the purchase of a new property is followed. After selling a golf course or driving range, taxpayers must:

  • Identify a new, like-kind property to purchase within the first 45 days
  • And purchase the new property within 180 days of the sale

Of course, you do not necessarily need to purchase the first property that is identified. Instead, you can choose up to 3 properties to consider before their value and mandatory purchase requirements come into play.

Using a 1031 Exchange Intermediary when Selling Golf Courses and Practice Ranges

In order to save the most money, time, and stress while using a 1031 exchange to sell your golf facilities, we strongly encourage you to seek out and speak with a reputable intermediary. Licensed professionals will ensure that everything is met along with the appropriate timelines and that all of the proper paperwork is filed.

Purchasing Mineral Rights and Royalties

Although there are certainly a large number of investments that could be made after using a 1031 exchange, we would like to highlight mineral rights and royalties. After selling your golf course, a passive asset such as mineral rights is a great way to earn a steady income from the sale of valuable minerals.

By working with a mineral rights expert, you may be able to identify plots of land and mineral rights shares that can be extremely valuable both as an income stream and property investment. If you are considering selling a golf course, we highly recommend exploring the possibility of mineral rights acquisition through a 1031 exchange.

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