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Summary of Iowa Beginning Farmer Tax Credit Program

Iowa has a special tax credit for landlords that work with beginning farmers. The tax credit varies depending on the type of lease agreement, but it can provide a significant benefit if the lessee qualifies as a beginning farmer. Qualifications for a beginning farmer for 2017 tax credit include:

  1. Maximum net worth of $645,284.
  2. Must be a resident of Iowa.
  3. Have sufficient training, education, and experience to know how to farm.
  4. Have access to capital, equipment, and livestock as needed.
  5. Must be the one doing the farming.
  6. Have financial risk for the operation.
  7. Cannot sublease the qualifying lease to someone else.
  8. Eligibility will continue if the beginning farmer’s net worth crosses the threshold during the term of the lease.

Eligible property for claiming a credit includes:

  1. Land.
  2. Equipment used for farming.
  3. Breeding livestock.
  4. The aforementioned assets must be in Iowa.

Types of qualifying leases include:

  1. Cash rent lease (credit is 7% of cash rent paid).
  2. Crop share lease (credit is 17% of county T-yield x Share % x RMA fall price). Landlord cannot receive more than 66% of the crop.
  3. Flex leases (credit is 7% of base cash rent paid).
  4. Leases must be a minimum of 2 years and a maximum of 5 years.

Click here for the official Iowa Finance Authority page on the Beginning Farmer Tax Credit. They have links to the program summary, application, and details of qualifications. Steve Ferguson is an excellent resource for all of your questions on Iowa Finance Authority beginning farmer programs.

Updated 5/26/2017

Shane Eloe About Shane Eloe

Shane has 12 years of experience in public practice and specializes in working with agriculture and construction businesses. If you have questions for Shane, please send him an email. To see his latest posts click here. Click here to connect with Shane on LinkedIn.

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