For more than a decade, rising land values made up for a lot of farm succession plans that didn’t quite add up. Growth has now slowed, farm profits are falling and interest rates are rising. If your plan relied on the land doing the heavy lifting, it’s time for another look.
Why flat land values change the maths
Most farm successions work the same way. One member of the next generation takes over the farm and pays out the family members who don’t farm, usually with borrowed money. While land values were climbing fast, that debt was easier to carry because the farm’s value grew faster than the loan. That tailwind is fading. shows growth slowed in 2025 to its weakest in 12 years. expects only modest gains in 2026, well below the pace of the past decade.
The income side is getting squeezed at the same time. the average broadacre farm’s profit to fall 39% in 2026–27, and the on 30 September 2026. So a buy-out now has to be paid for by what the farm earns, not by what the land might be worth one day.
Here’s a simple example. Say a family farm is worth $6 million and two members of the next generation inherit it equally. One wants to farm and the other doesn’t, so buying out the non-farming half means borrowing around $3 million. At an illustrative interest rate of 5.7%, the interest alone is roughly $170,000 a year, before a dollar of the loan is repaid. That’s more than the $133,000. Your farm may earn more or less than average, and your numbers will be different. The point is to run them before anyone signs anything.
Fair isn’t always equal
Flat values make fairness harder too. A non-farming family member sees a share of a valuable asset, while the farming successor sees one that earns a thin return and can’t be sold without ending the business. A straight buy-out isn’t the only answer, though. You can move the business first and the land over time, so the debt grows as the successor’s income does. The non-farming side can keep a share of the land and earn rent from it. Super, life insurance or off-farm investments can go to non-farming family members so the farm stays whole. Holding the land and the business in separate structures can make all of this easier to manage. Each option has its own tax, stamp duty and family consequences, so it’s worth modelling them together rather than one at a time.
The tax side of handing over the farm
Passing land to family is a CGT event even if no money changes hands, and the gain is usually worked out at market value. The good news is that the can shrink that gain or wipe it out. The most powerful is the 15-year exemption: if you’ve owned the land for 15 years and you’re 55 or older and retiring, there’s generally no CGT at all. There’s also a 50% reduction for business assets, a retirement exemption and a rollover. Keep in mind that the main residence exemption only covers the house and up to .
The catch is qualifying. You generally need turnover under $2 million or net assets under $6 million, and those limits . With land at today’s prices, a family farm can reach that line sooner than you’d think, especially once assets in related entities are counted. It’s worth knowing where you sit before you plan anything else.
Why 1 July 2027 matters
This is the big one. From 1 July 2027 the by inflation indexing and, for most individuals, a minimum tax on capital gains. Gains built up before that date keep the old treatment. Land owned since before 20 September 1985, which has always been exempt from CGT, will be .
For families that have held land for generations, a proper valuation at that date could be one of the most useful documents they own. The timing of any transfer is worth thinking through now, too. Some detail is still being written, including , so expect things to keep moving.
Stamp duty and funding the handover
Stamp duty can be a big cost on top of tax. In NSW, though, a working farm passing to a spouse or relative is usually , as long as it’s a genuine farming business before and after the transfer. Cousins and hobby farms miss out, and there are extra rules for trusts and companies. Victoria, Queensland and Western Australia each have their own version.
On the funding side, the Regional Investment Corporation’s lends up to $2 million for succession, including legal costs and stamp duty. It sits alongside a commercial lender, and you’ll need to meet its eligibility rules. Our can help you compare options and set up the loan so repayments match what the farm actually earns.
Where to start
- Get the farm valued now, and plan for another valuation at 1 July 2027.
- Check where you sit against the $6 million net asset test.
- Model the buy-out on today’s farm income and interest rates, not on future land growth.
- Talk through what “fair” looks like as a family.
- Check structures, stamp duty, wills and powers of attorney before anything moves.
Planning a handover?
Our , and teams can work through the tax, the numbers and the finance with you. For the wider tax traps in any family handover, read . When you’re ready, .
This is general information only and doesn’t take your circumstances into account. Speak to us before making decisions about transferring land, business assets or superannuation.