Tax break available for MN beginning farmers
The Minnesota Department of Agriculture's Rural Finance Authority is now accepting applications for a tax credit for the sale or lease of land, equipment, machinery and livestock by beginning farmers.
The application window is now open to beginning farmers for the Minnesota Department of Agriculture’s tax credit for the sale or lease of land, equipment, machinery and livestock.
The Beginning Farmer Tax Credit is available in the order applications are received. Applications must be turned in by Oct. 1, 2021.
Applicants must be Minnesota residents with the desire to start farming or who began farming in Minnesota within the last 10 years. Positive projected earnings statements, a net worth less than $851,000 and enrollment in an approved financial management program are requirements to apply.
Applicant farmers must be the main operator of the farm and cannot be directly related by blood or marriage to a person from whom they are buying or renting assets.
Upon approval, the tax credit for the sale or lease of assets can be applied to the Minnesota income taxes of the owner of the agricultural land or other assets.
There are three levels of credits 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.
According to the MDA, 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.