new Minnesota law provides a tax credit for farmers who decide to either sell or rent land and/or equipment to new farmers. Other states have previously passed laws that offer tax credits for landowners who lease farmland, but Minnesota’s new law is the country’s first one incentivizing the sale of land.

While the law is aimed exclusively at farmers for the time being, it remains to be seen whether future laws will broaden the tax incentives for all landowners to sell. For the time being, however, here is what to know about the Minnesota law if you are farmer who is considering leasing or selling land.

A Closer Look at the New Minnesota Land Sale Incentive for Farmers

While the new law’s tax incentives will certainly benefit farmers who sell a piece of their Minnesota land, the primary purpose of the new law is to help aspiring farmers. Minnesota lawmakers were concerned for the future of farming in the state based on data that showed fewer than four percent of the state’s farmers are under the age of 35.

The new law was designed to fix this issue by giving landowners in Minnesota a state income tax credit when they choose to either sell or rent their land/agricultural assets to a beginning farmer in the state. The credit is quite substantial as well, given that the credit is equal to:

  • Five percent of the land sale price
  • Ten percent of the cash rent
  • Fifteen percent of a cash share agreement

To qualify for this tax incentive, the beginning farmer is also required to take a farm management course that will make the new farmer eligible for a tax credit that covers the cost of their training.

The new tax credit will take effect starting in 2018, giving current landowning Minnesotans newfound reasons to sell or rent farmland and agricultural materials to a new farmer.

The net result of this legislation, then, appears to be a significant win for all farmers in the state. New and beginning farmers will have greater opportunities to succeed, while larger, established farms will have meaningful tax incentives to make the business decision of selling land worthwhile.

Will Minnesota’s New Land Sale Incentive Be a Blueprint for States to Follow?

The primary issue for any farmer’s success is whether they have access to land, which the Minnesota law solves in a forward-thinking way. According to 25-year-old grain farmer Matthew Fitzgerald, the new program benefits older and new farmers alike since retiring farmers receive a financial benefit while beginning farmers have the ability to get onto the land and farm. For someone looking for Minnesota land to begin their agricultural career with, this tax law marks a great opportunity.

Because of the new law’s potential, Fitzgerald is hopeful that the new law in Minnesota will set a standard for the rest of the country to follow. Fitzgerald says that the number one issue for farmers “is access to land”. This is true whether the farmer resides in Minnesota, Georgia or Colorado, as Fitzgerald puts it.

His point is clearly supported by the fact that America’s average farmer is 60 years old and less than two percent of America’s current workforce is working on farms. Laws like Minnesota’s are providing the financial incentives to connect America’s older and newer generations of farmers, in the hopes that America’s farming will continue to thrive in the years ahead. However, the price to purchase land is far from what it cost the retiring generation of farmers. With that in mind, leasing land for starting an agricultural career has become an increasingly popular way for the new generation of farmers to access the property they need to begin their careers, as it requires little cash up front.

Landowning Minnesota Farmers Can Receive Valuable Tax Credits While Putting the Next Generation of Farming in Capable Hands

Since the new Minnesota law solves the “access to land” issue for new farmers while providing financial incentives for established farmers, Fitzgerald sees the law as a positive way forward for the industry. For this reason, he has been in touch with other local chapters of the National Young Farmers Coalition in the hopes that he can pass on the policy and strategy lessons on how the law was passed in Minnesota.

Almost a quarter of America’s farmers are believed to retire in the next 25 years, and at present there are not enough new farmers ready to step in and fill their shoes. Not only will Minnesota farmers who own land now receive a financial benefit by selling some land to a new farmer, they may well be saving the future of farming in their state as well.

If you are a farmer looking to lease your farmland or agricultural land in Minnesota or any other state, look no further than LandLease.com. As the world’s largest land marketplace, we help landowners of all types reach companies looking to lease land. For those looking for land for lease in Minnesota, you can use our search tool to find properties that meet your criteria.

Visit our website and contact us to learn more about why LandLease.com is the right choice for putting your farmland to good use while making income.

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