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 on the full sale price in the first year of the contract. Applicants must submit either a settlement statement or notarized contract for deed as documentation.

This is generally determined by the number of years the beginning farmer has filed farm income on their federal income taxes, Schedule F. Years filing a Schedule F while claimed as a dependent by their parents or guardian (ex. as an FFA or 4-H activity) do not count toward the 10 years, and the years do not need to be consecutive (ex. farming in 2013, 2014, 2022, and 2023 would be 4 years total).

Generally, yes. The value of the residence (or any other non-agricultural improvement) will be deducted from the sale price to calculate the tax credit. The value of a home can be determined by submitting an itemized property tax statement or by providing a copy of the appraisal.

Example:

• Sale price is $500,000
• Appraisal value of home is $200,000
• Appraisal value of farmland and agricultural buildings (barn, pole shed, etc) is $300,000
• Tax credit would be 8 or 12% of the qualifying $300,000 in agricultural assets = $24,000 or $36,000

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. 

Yes, asset owners are eligible for the tax credit if they are selling their farm with a 1031 Exchange.

No. According to the state law for this program, an eligible asset owner is, “an individual, trust, or pass-through entity that is the owner in fee of agricultural land or has legal title to any other agricultural land.”  A C-Corporation is not a “pass-through” entity as described in the law. 

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.

Asset Owners - No. An asset owner can apply for the maximum tax credits for either a rental or a sale for each eligible beginning farmer each year. There is no lifetime limit, and they can continue to apply for the program as long as the beginning farmer they work with is eligible.

Beginning Farmers - Yes. Beginning farmers are only eligible for the FBM tuition reimbursement tax credit for three years. However, beginning farmers can continue to apply for the program with their asset owners for all 10 years that they are considered a beginning farmer (they just won't get an FBM tax credit for years 4-10).

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.

If the land has multiple owners, each individual (or married couple) who would like to receive a tax credit 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 receive a tax credit equal to 8% or 12% of their $200,000 share = $16,000 or $24,000 each.

If the land is owned by an entity (partnership, S. Corp, LLC, trust), the entity should submit one application.