Landlords and agricultural asset owners may qualify for a tax credit worth as much as $50,000 if they do business with emerging farmers.
Applications for the 2024 Beginning Farmer Tax Credit, also known as the Agricultural Assets Transfer Tax Credit, are now open in Iowa. The annual program, run by the Iowa Finance Authority, is open to those who lease their land, equipment and/or buildings to beginning farmers. Those who fit the criteria can get between a 5 percent and 15 percent tax credit.
The plan is designed to give new farmers access to land and equipment that they may not have been able to use if it weren't for the leasing by another person. The program began in 2007 with a $6 million allocation. In 2024, a budget of $12 million has been issued.
In addition to Iowa, the program is available in Kentucky, Minnesota, Nebraska, Ohio and Pennsylvania. In Iowa, 4,783 applications have been approved since it was introduced, according to Successful Farming.
Newsweek has reached out to the Iowa Agricultural Development Division via phone for comment.
Who is eligible?
According to the Iowa Agricultural Development Division (IADD), prospective applicants must meet the following thresholds:
- A resident of Iowa and at least 18 years of age.
- Have a net worth of no more than $833,000.
- Have sufficient education, training or experience for the anticipated farm operations.
- Have access to adequate working capital, equipment and other items that are necessary to operate on a farm.
- Be the owner/operator of the above.
- There is no restriction on off-farm income.
There are also criteria based on leasing terms, whether that be for equipment, land or buildings. They are:
- Lease must be for a minimum of two years but no more than five years, and must include land.
- For cash rent leases, the tax credit equals 5 percent of the cash rent. The cash rent cannot be more than 30 percent above the average cash rent for the county according to the most recent ISU cropland survey.
- For crop share leases, the tax credit is 15 percent.
Asset owners are not permitted to increase the rent or make any changes to the lease that would not be of benefit to the farmer while they are participating in this program.
How to apply
To apply, a form must be downloaded and filled out and all relevant documents delivered to the IADD, 1963 Bell Avenue, Des Moines, IA 50315. The forms can be accessed on the Iowa Finance Authority website.
If an applicant submits an incomplete form, they will be notified and have 30 days to correct it or submit any missing documents. If not fixed within 30 days, the application will be withdrawn.
Applications will be accepted until August 1, 2024, or until the tax credit allocation of $12 million has been awarded, with applications processed on a first-come, first-served basis.
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