• Reed Perkins

Policy: Ag Homestead Credit Refund Eligibility

Providing relief to our family farmers is a high priority for us. The difficulty for legislators in many states has been how to target funds to the smaller farms. When we look at the farm bailout money provided by the federal government, we see that over half of it went to just 10% of farms. To put it another way, 80% of bailout recipients received less than $5,000 each while 1% of bailout recipients received over $180,000 each. [1]

Minnesota is experiencing a particularly rough scenario for our farmers. We have the fifth most farm bankruptcies in the nation over the past 12 months and that number is almost four times higher than the same span of months six years ago. [2] To ensure the survival of our family farms we need to do a better job of getting relief funds to where they're needed the most. That's where the Ag Homestead Credit comes in.

The Ag Homestead Credit Refund exists to offset property taxes for people who both live on or near the farm while also taking an active role in the operation of the farm. For a full list of scenarios the program applies to, please see this page. [3] Because of the way the program is already set up, family farms are more easily targeted for refunds and credits.

One of the flaws with the program though is that the credit can be lost during transition times for the farm. One family member selling it to another or an established farmer selling it to an emerging farmer are both scenarios that could lead to temporary loss of this credit when the new buyer could use the relief the most.

It is for this reason that we have seen several farming groups in Minnesota call for a change in these rules to better ease that transition and ensure that these credits go to the groups that need them the most. We saw an amendment proposed with this during the 2019 legislative session, but unfortunately it didn't make it to the compromise budget. [4]

Helping family farms keep farms inside the family, helping new farmers get their feet under them, and targeting relief to small farms can all be done with tweaks to the Ag Homestead Credit Refund eligibility rules and Minnesota's farmers are at a time they need this change the most.

[1] https://www.reuters.com/article/us-usa-trade-farming/bulk-of-trumps-u-s-farm-aid-goes-to-biggest-and-wealthiest-farmers-advocacy-group-idUSKCN1UP28K

[2] https://bismarcktribune.com/news/state-and-regional/farm-bankruptcies-increase-nationwide-report-says/article_3a32f21e-103f-5e32-af26-0772d2526675.html

[3] https://extension.umn.edu/transfer-and-estate-planning/maintaining-farmland-homestead-classification

[4] https://www.mfu.org/legislative-updates/

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