Beginning farmers tax break still available
Published 5:36 pm Tuesday, July 27, 2021
Tax credit available for land, equipment expenses to start farming
A tax credit for the sale or lease of land, equipment, machinery, and livestock in Minnesota by beginning farmers is still available through the Minnesota Department of Agriculture’s (MDA) Rural Finance Authority.
The Beginning Farmer Tax Credit is available on a first-come, first-served basis. Applications must be received by October 1, 2021.
To qualify, the applicant must be a Minnesota resident with the desire to start farming or who began farming in Minnesota within the past ten years, provide positive projected earnings statements, have a net worth less than $862,000, and enroll in, or have completed an approved financial management program.
The farmer cannot be related by blood or marriage (e.g., a parent, child, grandparent, grandchild, or sibling) to the person from whom he or she is buying or renting assets. The farmer must provide most of the labor and management of the farm.
The tax credit for the sale or lease of assets can then be applied to the Minnesota income taxes of the owner of the agricultural land or other assets.
Three levels of credits are available:
5% of the lesser of the sale price or fair market value of the agricultural asset up to a maximum of $32,000
10% of the gross rental income of each of the first, second and third years of a rental agreement, up to a maximum of $7,000 per year
15% of the cash equivalent of the gross rental income in each of the first, second or third year of a share rent agreement, up to a maximum of $10,000 per year