It’s no secret that farming is a difficult profession. Farms operate at the mercy of the markets and Mother Nature. Getting a little relief from taxes can go a long way for farmers who find it difficult to survive. Recently, Minnesota enacted two programs that offer tax credits for farms.
Minnesota Beginning Farmer Tax Credit
Under this new law, farm owners get tax credit for renting or selling farm land or farm assets to other farmers. However, this is only for beginning farmers who:
- Are Minnesota residents just entering into farming or who became farmers in the past 10 years.
- Will provide most of the labor and management of the farm.
- Already have experience and knowledge in farming, specifically the type for which they seek financial assistance.
- Have positive projected earnings statements.
- Are not related to the current owner of the farm asset they are purchasing.
- Have a net worth under the 2018 limit, which is $816,800.
The credit allowed is:
- 5% of the sale price or fair market value, whichever is less, up to $32,000.
- 10% of any gross rental income in the first three years of a rental agreement, up to $7,000 annually.
- 15% of the cash value of gross rental income in first three years of share rent agreement.
Established farmers can claim the tax credits, while giving the next generation of farmers a head start. Additionally, beginning farmers must take financial management courses to help them be as successful as possible.
2017 Omnibus Bill: Farmer Tax Credit
Minnesota lawmakers passed an omnibus bill in 2017 that offered tax relief to several groups. For example, farmers received a 40 percent tax credit that pertains to school debt bond levies. In some districts, families living on farms don’t make up a large part of the tax base. However, their land does. In the long run, they end up paying far more in taxes than other taxpayers. This bill should give farmers a nice reduction in taxes.
In addition, rural school districts may benefit from the tax relief. Farmers in rural districts may be more likely to vote for school bonds since their share is lower.
Talk to an Experience Minnesota Lawyer.
At Virtus Law, we assist people with legal questions like yours. Contact us by calling 612.888.1000 or by emailing us at email@example.com. Our main office is in Minneapolis, with other offices located in Maplewood, Cambridge, Edina, Mendota Heights, and Red Wing.