Frequently Asked Questions
Beginning Farmer Tax Credit
For more information and application instructions, visit the program's main page.
No. Based on the state law for this program, the beginning farmer must be an individual sole proprietor, not a business entity. Farmers who structure their businesses as LLCs (even single member), partnerships, etc. must apply as individuals with their own name (not the business name) listed on the lease or sale documents.
Asset owners, however, may be an individual, trust, LLC, partnership, S-Corp, or other qualified pass-through entity.
Yes. Applicants must apply in the first year of the contract. The asset owner will received a tax credit equal to 5% of the full sale price (or our stated maximum for sales) in the first year of the contract. Applicants must submit either a settlement statement or notarized contract for deed as documentation.
The "clock starts" the first year the beginning farmer files federal tax form Schedule F for reporting farming income and expenses. Years filing a Schedule F while being claimed as a dependent by their parents or guardian (ex. as an FFA or 4-H activity) do not count toward the 10 years.
The value of the residence will be deducted from the sale price to calculate the tax credit. The value of a home can be determined by submitting a property tax statement or by providing a copy of the appraisal.
Yes, asset owners who are not full-time Minnesota residents are eligible. However, this tax credit is only for tax liability due to the state of Minnesota.
We mail tax credit certificates to approved applicants in January each year. For example: If you are approved for a tax credit in 2023, we will mail your tax credit certificate in January 2024 for the 2023 tax season.
This tax credit is nonrefundable, meaning it will only reduce the Minnesota state taxes you owe and will never be issued as a tax refund. However, asset owners may carry the tax credit forward for 15 years, and beginning farmers may carry the tax credit forward for 3 years. To carry a tax credit forward, you do not need to reapply and will use the same certificate number.
Beginning farmers must apply every year to confirm their eligibility. Asset owners must apply every year for 1-year leases and sales. If an asset owner is applying with a multi-year lease, they only need to apply every three years or sooner if the lease ends or is modified.
Yes. Funding for this program is first-come, first-served, so we encourage applicants to apply as soon as they are prepared with a purchase agreement or lease.
No. You must apply for the tax credit before the stated deadlines in the year your sale or lease took place. If your sale takes place in November or December after our deadline, we recommend applying before the sale with a purchase agreement or holding your sale until January and applying in the new year.
Everyone who wishes to receive a tax credit must apply. If the land is owned by multiple individuals, each individual asset owner must apply separately. The tax credit will be based on the percentage of the asset that each person owns. For example: If three siblings equally own and are selling a $600,000 farm, they would each receive a tax credit equal to 5% of their $200,000 share, $10,000.
If the land is owned by an entity (partnership, S. Corp, LLC, non-grantor trust), only the entity must apply.