According to the Successful Farming, the used machinery market is red-hot, even when it come to older equipment.
While the price floor is pushing up the values of lowhour, late-model equipment, the market place is also displaying strong support for older equipment, which is enjoying sales at auction.
“Most surprising are recent prices in tractors 15 years and older that are showing great care, good tires, and a pedigree,” says Scott Steffes of the Steffes Group.
The rising tide of values is also lifting the prices on implements, especially till age equipment.
The widespread availability of internet sale sites allowing farmers to list equipment online without having to transport that equipment to an auction lot has opened up opportunities for farmers to generate cash to help put the crop in or underwrite the purchase of new machinery.
One option to sell used equipment would be through a private treaty, eBay-style online auction where equipment is listed with a photo and description, then set a time limit to sell. Such sites include fastline.com, ironplanet.com, ironsearch.com and tractorhouse.com.
Some of the hottest marketplaces for machines are online auctions such as bigiron.com or steffergroup.com that send representatives to the farm to take pictures and write a description of the equipment, which is also listed for potential buyers if they have questions about machinery.
The equipment is then sold at auction on a specific date. After the sale, the online auction company pay the seller directly, minus any seller fees.
The buyer is responsible for arranging for the equipment to be picked up from the farm.
Sellers are responsible for all sales taxes on such a transaction, although new and used farm machinery is exempt form sales tax in many states. It is advisable to contact an accountant or check with the state’s department of revenue if you have any questions about sales tax.
It is also important to be mindful of potential taxes on depreciation recapture.
For a seller, a large amount of recaptured depreciation and capital gain may arise from the sale of machinery, especially if some assets have an adjusted tax basis of zero or depreciated out.
In the case of selling machinery, the recapture of depreciation is ordinary gain, not capital gain.
The difference is that ordinary gain is taxed at whatever the tax bracket the taxpayer falls into.