Turn Your Land's Nutrients into Major Tax Savings

Section 180 is an IRS code that lets qualifying farmers or landowners deduct soil nutrient costs in the same year they purchase their property, rather than spreading them out over time. If you meet the IRS's definition of being "in the business" of farming or ranching, you may be able to write off the full value of your soil's nutrients immediately.

Savings vary based on nutrient levels, land basis, and current fertilizer prices. Many landowners see deductions averaging $400–$800 per acre. In nutrient-rich soils, it can exceed $1,000 per acre. On average, this deduction can be 10–15% of the land's purchase price.

Yes. Even if you're not an active farmer, you may still be eligible to claim residual fertility through Sections 167 & 168 of the Internal Revenue Code.

As long as soil tests & documentation support the allocation, land investors can depreciate the residual fertility over time—similar to how you'd depreciate tile drainage or irrigation improvements.

Ideally, you should claim it in the year of purchase. If you missed it within the last three years, you can amend your returns. If it's been longer, you can often still file retroactively—up to 15+ years back—by using IRS Form 3115 to catch up on missed deductions. Always consult a CPA for personalized guidance.

Possibly. If you were renting and have already deducted fertilizer costs, you must avoid "double-dipping." However, there can still be residual nutrients at purchase. Proper documentation is crucial to demonstrate what was or wasn't previously deducted. Consult a professional to confirm your specific situation.

Residual fertility deductions can be applied retroactively if the land was purchased in prior years—often by filing a Form 3115 (Change in Accounting Method) with a Section 481(a) adjustment.

This allows landowners to recognize the full depreciation adjustment in the current year, potentially creating a net operating loss (NOL) that can offset prior or future taxable income, subject to IRS limits.

That's true under Section 180, which applies to taxpayers "engaged in the business of farming." However, passive landowners are treated differently.

Instead of expensing fertilizer in the year it's applied, land investors can allocate part of their purchase price to the nutrients already in the soil and recover that cost through depreciation (Sections 167 & 168).

This creates a parallel path—farmers get immediate deductions; investors take structured depreciation.

Yes. While we provide all the agronomic expertise and soil analysis needed to document nutrient levels, we recommend working with a CPA to ensure your filing is done correctly. Our detailed reports are designed to make your deductions fully defensible if the IRS ever questions your claim.