NASHVILLE, Tenn. (RFD-TV) — Farmers frequently face decisions that depend on knowing the true value of their assets, making fair market value (FMV) an essential concept in farm management, tax planning, and estate transitions. Kevin Burkett, Extension Associate and Assistant Director of the Ag Tax School at Auburn University, says FMV matters because it determines how land, equipment, and other farm assets are valued when ownership changes or financial records are updated.
FMV represents the price an asset would bring in an open market between a willing buyer and a willing seller, without pressure to buy or sell. That definition becomes especially important in estates, where heirs often receive a step-up in basis that requires an accurate FMV determination, even when no sale occurs.
For producers, getting FMV right helps avoid undervaluing property during sales, estate settlements, or lending discussions. It also prevents overvaluation when assessing depreciation, tax liabilities, or potential capital gains. Because market prices shift over time, Burkett notes that farmers often rely on recent sales, listings, or professional appraisals. Qualified appraisers evaluate comparable sales, replacement cost, and income-generating potential to assign an accurate value.
Looking ahead, producers planning transitions, expansions, or succession should maintain solid documentation and seek guidance from trusted advisors — accountants, attorneys, tax specialists, and appraisers — to ensure valuations reflect actual market conditions.
Farm-Level Takeaway: Fair market value shapes taxes, transitions, lending, and sales, making accurate valuation essential for long-term planning.
Tony St. James, RFD-TV Markets Specialist
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