How a Nebraska Landowner Used a 721 Exchange to Keep the Next Generation Farming
When Larry Consbruck retired from farming in 2014, he decided not to sell the 1,100 acres he owned and operated just outside the south central Nebraska towns of Juniata and Roseland. Instead, he leased the land to his nephew, a young farmer who wanted to farm but didn't have land of his own.
"It was always my goal to own land," Consbruck said. "When I started buying it in the 70s, the land could generate enough income to pay for itself. Today, it's a lot harder because land is so expensive, and farmers are barely making a profit."
As the years passed, Consbruck began thinking about selling the farm. But he wanted his nephew to continue farming it.
"Knowing what the current farm economy is like, I knew it would be difficult for him to buy the farm," Consbruck said. "We really wanted to help keep the next generation farming."
That goal to help his nephew led Consbruck to an option he had never heard of before: a 721 exchange.
How Does a 721 Exchange Work?
Lindsey Feuerborn, a realtor with Lashley Land and Recreational Brokers, introduced Consbruck to the concept after learning about 721 exchange funds.
Rather than selling the land outright, a 721 exchange allows a landowner to contribute real estate to a partnership in exchange for ownership shares in that partnership.
Ethan Branscum of Sower Investment Partners in Omaha, Nebraska, works with landowners transitioning farmland into 721 exchange structures. He said the concept comes from Section 721 of the Internal Revenue Code and has existed since the 1950s, although it has only recently gained more attention in agricultural real estate.
"Per that section of the tax code, it allows people to exchange real estate into a partnership with no immediate tax implication," Branscum said. "They contribute land into a partnership, and what they receive in return is ownership in that partnership."
Instead of directly owning a particular farm, landowners own shares in the partnership and retain the value of their investment.
Branscum compares it to owning stock in a company.
"When they have ownership in our farmland fund, they're not losing any value of their assets," he said. "They retain that value, but now they have a lot of different options."
The fund takes over management of the property and its associated expenses. Investors also receive distributions from rental income generated by the properties in the fund.
For Consbruck, the arrangement offered another important benefit: He was able to negotiate a long-term lease that allowed his nephew to continue farming the land.
How Can a 721 Exchange Help Landowners?
Branscum said a 721 exchange can also appeal to landowners thinking about estate planning.
"Land is hard to divide, and determining how to divide it equally can be difficult," he said. "If you utilize this option, it's a pretty clean way to divide assets later in life."
Because contributing property to a partnership under Section 721 generally does not create an immediate capital gains tax event, the structure can provide another option for landowners with highly appreciated farmland.
Feuerborn said that flexibility was part of what made the strategy attractive for Consbruck and his family.
"This is a fantastic option for families to pass down their land in a different way," she said.
Ultimately, Consbruck contributed a portion of his land to the exchange fund, while another portion was purchased outright by Sower Investment Partners.
Amy Lashley-Johnston, vice president and marketing director for Lashley Land and Recreational Brokers, said the transaction was the company's first involving a 721 exchange.
She expects there will be more.
"This is a 'where have you been all my life?' kind of solution," Lashley-Johnston said.
She believes the structure can help landowners who want to sell while still providing a long-term lease for family members who want to continue farming. It may also give landowners access to capital for retirement, debt reduction, or other financial needs without simply selling the farm and ending the family's connection to it.
Another potential benefit is avoiding disputes among heirs who have different ideas about whether inherited farmland should be sold or retained.
"As for me, the 721 checks a ton of boxes," Lashley-Johnston said. "It saves us from a situation where a family goes to court and forces a sale."
What Were the Land Values for This Nebraska Property?
Consbruck's 1,106-acre property was marketed in four parcels for a combined asking price of $12,422,100, or about $11,231 per acre. Feuerborn said the final selling price was close to the asking price.
The property included highly productive irrigated farmland, with individual parcels carrying National Commodity Crop Productivity Index (NCCPI) ratings ranging from 65.9 to 74.7. The farm also included center-pivot and subsurface irrigation.
For comparison, the University of Nebraska-Lincoln's 2026 Nebraska Farm Real Estate Market Survey reported that center-pivot irrigated cropland in Nebraska's south region averaged $8,490 per acre. The statewide average for agricultural land was $3,905 per acre, down 1% from the previous year.
How Did a 721 Exchange Help Transition Ownership?
For Consbruck, the decision wasn't simply about selling farmland. It was about finding a way to transition ownership while giving his nephew a chance to keep farming.
Because the 721 exchange was unfamiliar, Consbruck spent considerable time researching the strategy, asking questions, and consulting with an attorney before moving forward.
Today, he believes other landowners should at least consider the option.
"Do you want to keep the next generation farming?" Consbruck said. "If so, then yes, this is a good option."
RELATED: Ethan Branscum explained on the American Farmland Owner Podcast when 721 exchanges could make sense for land owners.
