Beginning Farmer Tax Credit
Have you ever heard of the Beginning Farmer Tax Credit? Maybe you didn’t think you qualified or you thought it looked like too much work. The Beginning Farmer Tax Credit is designed to secure leased land and to help young farmers get lower rent rates and in return the landowner gets a tax benefit on their Iowa return to help offset the difference. Cash rent, crop share and flex leases all qualify for this credit.
As of January 1st, 2016, the maximum net worth changed and the Beginning Farmer’s net worth is now limited to $672,171. The application for the Beginning Farmer Tax Credit is due no later than September 1st for the landowner to get the credit on that year’s tax return. Credits are calculated differently depending on what type of lease the Beginning Farmer has with the landlord. Cash rent is a fixed 7% of the rent paid. For crop shares, the calculation for the credit is based on prior year county averages and prior year’s RMA, Risk Management Agency, fall price. The credit for a flex lease is calculated solely on the cash rent paid, not the flex bonuses. You can lease land and equipment to more than one Beginning Farmer but the credit maxes out at $50,000.
We have helped other clients with their questions and the application process. Please contact us for more information regarding the Beginning Farmer Tax Credit.