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Comment by Spooky23 | Hacker News Reader

No way. Land has low carrying cost and people will sit on it for years to speculate or hold neighbors hostage.

Part of this is that a lot of states have agricultural exemptions or lower rates for farmland. Even if it's not effectively farmed. Or McMansions in the countryside exploiting the same law via what my dad called "Noah's Ark farms" (just two of every animal).

So yes, if you want to game the system and sit on land, there's little tax incentive to sell it.

In the UK this is doubly true, because you also receive your subsidy from the EU for owning that land. In fact in many ways farming it less efficiently gets you more as you can qualify for environmental uplifts for using less fertilizer and keeping bigger headlands and hedges.

It's worth metioning that this distribution system is decided by the UK government (or possibly Eng/Scot etc governements). The EU allocates subsidy to the member nations according to one system (not accounting for e.g. bigger hedges), which allocate subsidy to farmer/business according to their own system. It is entirely possible for the UK government, within the EU, to allocate money to farms as an insurance system against bad years, or to encourage profitability at all costs, or in another way.

In theory, does land appreciate at the risk-free rate? Or does holding land mean that you lose the opportunity cost of what you could have otherwise done with the money?

No, there is lots of risk in land, particularly if you borrow money to buy it!

People have different risk evaluation and time horizons. If you are sitting on a lot of capital, it’s a no brainer to buy land when financial bubbles pop and leveraged owners need to unload cheap.

Not only do you have a long term inflation hedge, but it’s real property, which means you can borrow against it to get cash without paying taxes via dividends or sale.

Iowa is great for investors like this because the whole state is just a big corn factory. The government tries to keep commodity prices less volatile, so you can project lease income with some precision using the value of corn.

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