ST. PAUL — 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 Rural Finance Authority.
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 percent of the lesser of the sale price or fair market value of the agricultural asset up to a maximum of $32,000; 10 percent 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; and 15 percent 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.
The Beginning Farmer Tax Credit is available on a first-come, first-served basis. Applications must be received by Oct. 1. Application forms and more information can be found at www.mda.state.mn.us/bftc.
Interested farmers should note that they can also apply for a separate tax credit to offset the cost of a financial management program up to a maximum of $1,500 per year – for up to three years.
This article was submitted by the Minnesota Department of Agriculture.