New Farmer Tax Credit Legislation takes effect on January 1, 2018. Minnesota farmers can qualify for several tax credits for beginning farmers and agricultural asset owners. The credit is equivalent to 5 percent of the sale price of agricultural assets, 10 percent of the cash rent or 15 percent for a share rental agreement to beginning farmers.
Qualifying agricultural asset owners can claim credits in a given tax year up to the maximums allowed in each category. The maximum credits to be claimed per year by the asset owner are $32,000 for a sale, $7,000 for rent, and $10,000 for share rental agreements. Those credits would offset state tax liability dollar for dollar.
The farmer tax credit is a first-of-its-kind law aimed at beginning farmers to assist them in gaining access to renting or purchasing land or other agricultural assets. Beginning Farmers can receive a tax credit of up to $1500 for enrolling in an eligible farm business management program.
To be eligible for the program, the beginning farmer needs to have farmed for 10 or fewer years and must take an approved farm business management course. Land/asset owners can not be directly related to the beginning farmer. This includes parents, grandparents, brothers, sisters, spouses, children, and grandchildren.
The tax credits are on a first come, first served basis. The Rural Finance Authority will administer the tax credits by certifying beginning farmers and assisting beginning farms with locating eligible farm business management programs in their area. The maximum amount available in 2018 is $5 million in tax credits. This increases to $6 million per year in the 2019 thru tax year 2023. The asset owner may be an individual, trust, or a qualified pass-through entity.
As we near the effective date of the new farmer Tax Credit Legislation, the Minnesota West Community & Technical College Farm Business Management team will be holding a series of free/open to the public informational meetings. Meetings to be held:
Tuesday, December 5 @ 4:00 pm—GRANITE FALLS (Minnesota West, room #305)
Thursday, December 7@ 6:30 pm—CANBY (Minnesota West, Ag bldg., room #421)
For more information or questions contact: firstname.lastname@example.org or Brad Verly at (507) 828-8506. Our goal is to assist accountants, real estate agents, landowners & asset owners along with the beginning farmers in gaining a better understanding of the new agriculture tax credit legislation.”
Brad Verly is a Farm Business Management Instructor at Minnesota West Community and Technical College.