Before the next land purchase, build a better file.

The closing statement is a starting point. A useful property file tells the rest of the story.

A farm purchase brings together a price, a parcel, and a long list of facts that can be difficult to reconstruct later. Start the file while those facts are still available. The goal is to give your advisers a reliable record of what was acquired, what it cost, and how it will be used.

Keep the transaction together.

Save the signed purchase agreement and its amendments, the final settlement statement, the deed, financing documents, and any purchase-price allocation. Keep correspondence that explains a change to the transaction alongside the final documents. One organized folder is easier to review than a series of email attachments.

Record what was actually there.

Walk the property and make a dated inventory. Photograph buildings, fencing, gates, water systems, access drives, and other improvements. Record dimensions, apparent condition, and the source of any estimate. Distinguish what came with the purchase from work you performed after closing.

The IRS Farmer’s Tax Guide explains that a lump-sum purchase of land and improvements requires a basis allocation. A price assigned to an item needs support; a replacement-cost estimate by itself does not establish the acquired item’s fair market value.

Capture the property’s history.

Collect available leases, maps, management records, and relevant third-party reports. If you previously farmed or leased the property, flag that history at the beginning. Tell your adviser which improvements or inputs you paid for before the purchase, and retain those invoices.

Describe your plans.

Will you operate the property, rent it out, change its use, or sell part of it? Are there improvements you plan to replace? Record the anticipated use and timing so your adviser can evaluate the transaction in context.

Bring questions, not just documents.

What assets and rights did this transaction transfer?

What evidence supports the value assigned to each component?

What additional facts does my adviser need before taking a position?

How should the property file be updated after closing?

This is a suggested record-gathering workflow. It does not establish a deduction, a depreciation period, or eligibility for a particular tax treatment.

Source: IRS Publication 225 (2025), Farmer’s Tax Guide — Chapters 1 and 6. https://www.irs.gov/publications/p225

Reference checked October 1, 2026. IRS publications are explanatory guidance; a transaction-specific conclusion may require statutes, regulations, case law, and additional authority.