When you buy farmland, you’re not just buying acres and yield potential — you’re also buying the residual fertility already in the soil. And for many growers, that piece of the investment gets overlooked.
Residual soil fertility, also called legacy soil nutrition, the nutrients already present in the ground at the time of purchase or inheritance, can represent real, documentable value. Under IRS Section 180 and related tax codes, that value may be eligible for a deduction when it’s properly measured and supported. Yet many growers don’t realize this opportunity exists, even years after buying land.
If you’ve always thought about fertility as something you add (fertilizer, lime, amendments), this is a shift: the fertility already there can potentially be treated as an asset you purchased, and one that gets used up over time as crops remove nutrients.
What “Residual Fertility” Really Means
Residual fertility refers to crop-producing nutrients already present in the soil at the time land changes hands. These nutrients don’t disappear at closing. They remain in the soil and support crop production for seasons to come, and in many cases, there’s more than the crop needs to reach a baseline “critical level.”
In other words, when you buy farmland, you’re also buying the fertility that’s already in the ground.
Nutrients Commonly Included in a Residual Fertility Valuation
These are examples of nutrients that may already be in the soil and can be evaluated in a residual fertility valuation (depending on available data and the methodology used):
Micronutrients: Zinc (Zn), Iron (Fe), Manganese (Mn), Copper (Cu) (and others depending on the lab panel)
Macronutrients: Nitrogen (N), Phosphorus (P), Potassium (K)
Secondary nutrients: Sulfur (S), Calcium (Ca), Magnesium (Mg)
(Your CPA determines eligibility and filing approach; an agronomic report provides the defensible documentation and valuation inputs.)
Why Most Growers Haven’t Heard About This
Section 180 has been in the tax code for decades, but it’s still widely underused. The biggest reason is practical: there hasn’t historically been a consistent, field-specific way to document what fertility was already in the soil at the time of purchase — and to do so in a way that holds up under questioning.
In a recent webinar, we covered a few reasons this gets missed:
- The topic sits between agronomy and tax accounting, and that gap is real
- Landowners haven’t had access to field-specific critical levels that align
- CPAs may be cautious simply because they don’t see strong, repeatable documentation often
Turning “Already-in-the-Soil” Fertility Into Documented Value
At the core, the concept is straightforward:
- Measure what’s in the soil (through soil test data tied to a field)
- Establish a critical level baseline (so you’re valuing “excess” above what’s needed)
- Assign element-level nutrient pricing based on the time of acquisition
- Account for what happened between purchase and sampling, such as yield removal and fertility applied, to properly estimate what was already there at purchase
This matters because the goal isn’t to guess, it’s to be accurate about the fertility already in the soil at acquisition, and document it clearly.
What Kind of Numbers Are We Talking About?
Every field is different, but we find that typical deductions range from $1,000 to $1, 500 per acre, with a broader range possible depending on fertility levels, sampling recency, and nutrient pricing at the time of purchase.
This isn’t a cash rebate; it’s a reduction in taxable income, and the cash impact depends on your effective tax rate. Even low estimates can make the point: a per-acre deduction can translate into meaningful protection of operating cash, especially in years when margins are tight.
A Different Way to Think About Land Purchases
Most growers already understand that fertility in the soil has value, it influences yield potential and future input needs. The “aha” is realizing that when you buy land, you may be buying a measurable supply of nutrients already in the soil, and that value can potentially be recognized and documented.
Watch the Full Webinar
In the full session, we go deeper into:
- How residual fertility is calculated and documented
- What kinds of scenarios tend to qualify (and which don’t)
- How to think about timelines, data requirements, and working with your CPA