Land

What is 'Land'

Land is real estate or property, minus buildings and equipment, that does not occur in a natural way. Land ownership may offer the title holder the right to natural resources on the land. The traditional school of economics dictates that land is a factor of production, along with capital and labor. The sale of land results in capital gain or loss; under IRS tax laws, land is not a depreciable asset.

BREAKING DOWN 'Land'

The term land can be looked at in a number of ways, and its definition viewed differently depending on the nature under which it is analyzed. The basic concept of land is it is a piece of earth, namely a piece of property that has an owner.

A more delineated concept of land, the legal concept of land, is it is a factor of some form of production, and though it is not consumed during this production, no production would be possible without it. Land is, therefore, a resource with no cost of production. Despite the fact usages of land can be altered from less to more profitable, supply cannot be increased.

Aspects or Elements of Land

The term land is inclusive of all physical elements, bestowed by nature, to a specific area or piece of property. This includes environment, fields, forests, minerals, climate, animals and bodies or sources of water. In terms of being an asset, land includes anything that is on the ground, which means buildings, trees and water are a part of land as an asset. Lenders are extremely attracted to land because it is one of the oldest form of collateral, and because it cannot be moved, stolen, wasted or destroyed. Air and space rights are also covered by the term, meaning all air and space above and below the property is part of the term.

Natural Resources

There is a wealth of natural resources that may be present on a property or piece of land that the owner, or title holder, may be entitled to. This includes plants, human and animal life, soil, minerals, geographical location, electromagnetic features and geophysical occurrences. Depletion of various natural resources in the United States, specifically natural gas and oil, is of great value and drilling and oil companies, in many instances, pay landowners substantial sums of money for the privilege of using an owner's land to access such natural resources, as well as shell out small fortunes for large acreages of access, specifically if the land is rich in a specific resource.

RELATED TERMS
  1. Land Value

    The value of a piece of property, including both the value of ...
  2. Land Value Tax - LVT

    A tax on the value of a piece of land. Land value tax inherently ...
  3. Land Flip

    A fraudulent practice in the real estate business of selling ...
  4. Littoral Land

    Land that is located next to a pooled body of water. Littoral ...
  5. Land Trust

    A legal agreement where a trustee is appointed to maintain ownership ...
  6. Adverse Possession

    A principle of real estate law that allows a person who possesses ...
Related Articles
  1. Managing Wealth

    How to Keep a Land Investment From Going Bust

    Investing in land can yield big returns. But investors should consider their goals, as well as the following details, to make the deal a success.
  2. Personal Finance

    Uncover The Next Real Estate Hot Spot

    Real estate land speculation is a way to get in on a hot investment before a boom hits.
  3. Managing Wealth

    There Are More Ways To Invest In Land Than You Think

    You don't have to have a huge amount of capital to invest in land. You have many other options, including land-related ETFs and ETNs.
  4. Personal Finance

    Top 4 Things That Determine A Home's Value

    Your house depreciates over time, while the land beneath it is likely to do the opposite.
  5. Retirement

    The Top 5 States Where Retirees Can Buy Cheap Land

    Buying vacant land for future gain is high-risk. Look for low prices in undeveloped areas likely to see a building boom in the near future. Here are five.
  6. Investing

    Understanding Real Estate

    Real estate is an encompassing term that refers to land, the buildings on that land, and its natural resources, such as crops and minerals.
  7. Personal Finance

    What Homebuyers Should Know Before Buying

    A physical structure depreciates over time, but the land underneath it appreciates.
  8. Markets

    Factors Of Production

    Factors of production is an economic term describing the general inputs used to produce goods and services to make a profit. Under the classical view of economics, the factors of production consist ...
  9. Investing

    How You Make Money In Real Estate

    No matter what anyone tells you, the basic ways that money is made through real estate haven’t changed in centuries.
  10. Markets

    Lands' End Looks to Athleisure Wear for Turnaround

    Hoping to reverse a four-year skid that has seen sales fall at an annual compounded rate of 5%, Lands' End (NASDAQ: LE) is pinning its growth hopes on the athleisure wear trend. The retailer ...
RELATED FAQS
  1. What inputs are considered to be factors of production?

    Learn what the economic term "factors of production" means, what the four categories of factors of production are and what ... Read Answer >>
  2. What is the difference between real estate and real property?

    Understand how real estate is legally different from real property and the implications of that difference for each property ... Read Answer >>
  3. What is property, plant and equipment, and what does it mean?

    Property, plant and equipment (PP&E) is a term that describes an account on the balance sheet. The PP&E account is a summation ... Read Answer >>
  4. Why are the factors of production important to economic growth?

    Find out why the factors of production are critical for real economic growth, where wages rise and consumer goods costs fall ... Read Answer >>
  5. If a telecommunication company wants to build a tower on my land how much should ...

    Get help in understanding how much income it is possible to receive for leasing land to a telecommunications company for ... Read Answer >>
  6. How are capitalism and private property related?

    Read about the relationship between capitalism and private property rights, and learn why voluntary trade would collapse ... Read Answer >>
Hot Definitions
  1. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  2. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  3. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  4. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
  5. Weighted Average Life - WAL

    The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. Once calculated, ...
  6. Real Rate Of Return

    The annual percentage return realized on an investment, which is adjusted for changes in prices due to inflation or other ...
Trading Center