Newer farmers and Minnesotans with a desire to start farming have a new tax credit available to help offset the cost of starting a new farming operation. People have until November 1, 2018 to apply, says Senator Tony Lourey (DFL-Kerrick). Full details about eligibility and benefits are available online at www.mda.state.mn.us/bftc.
“Family farmers in Minnesota are going out of business because they are unable to compete with giant corporations and are being treated unfairly by them,” said Sen. Lourey. “Supporting ordinary folks just starting out in agriculture is not only a smart investment, it’s the right thing to do.”
The tax credit is available through the Minnesota Department of Agriculture’s Rural Finance Authority on a first-come, first-serve basis for individuals who meet specific criteria. For example, applicants must be a Minnesota resident with the desire to start farming or began farming within the past ten years, provide projected earnings statements, have a net worth less than $816,800, and enroll in an approved financial management program. The farmer cannot be directly related to the person from which he or she is buying or renting assets. The tax credit for the sale or lease of assets can then be applied to the Minnesota income taxes of the owner of the farm land or agricultural 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.
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.