Iowa Administrative Code › Agency 701 - Revenue Department › Title I - Administration › Chapter 80 - Property Tax Credits and Exemptions › Rule 701-80.11 - Family Farm Tax Credit

Current through Register Vol. 47, No. 3, July 24, 2024
(1)
Eligibility for credit.
Generally, the family farm tax credit
				is only intended to benefit tracts of agricultural land that are owned by
				certain individuals or enumerated legal entities if the owner or other
				specified persons are actively engaged in farming.
a. In order for a tract of land to qualify
				for the family farm tax credit, the following three criteria must be satisfied:
(1) The tract of land must be an "eligible
				tract of agricultural land" as defined in Iowa Code subsection
				425A2(5).. This means
				the tract must be ten acres or more or contiguous to a tract of more than ten
				acres and used in good faith for agricultural or horticultural purposes. More
				than half of the acres in the tract must be devoted to the production of crops
				or livestock by a designated person. Contiguous tracts under the same legal
				ownership and located within the same county are considered one tract. Only
				tracts of land that are classified as agricultural real estate qualify for the
				credit.
(2) The tract of land must
				be owned by:
1. An individual or persons
				related or formerly related to each other, or
2. A partnership where all the partners are
				related or formerly related to each other, or
3. A family farm corporation as defined in
				Iowa Code subsection 9H. 1(8), or
4. An authorized farm corporation as defined
				in Iowa Code subsection 9H. 1(3).
The ownership criteria must be met on June 30 of the fiscal
				  year prior to the fiscal year in which the application for credit is filed. For
				  example, the ownership criteria must be met on June 30, 1990, for applications
				  for credit filed in 1990.
(3) A designated person must be "actively
				engaged in farming" the tract during the fiscal year prior to the fiscal year
				in which the application for credit is filed. If the tract is owned by an
				individual or related persons, the designated person who is actively engaged in
				farming must be an owner of the tract, the owner's spouse, or the owner's
				relative within the third degree of consanguinity or their spouses. This
				includes the owner's child, stepchild, grandchild, great-grandchild, parent,
				grandparent, great-grandparent, brother, sister, uncle, aunt, niece, or nephew
				or their spouses. The only step relative that may qualify as a designated
				person is a stepchild. If the owner of the tract is a partnership, the
				designated person who is actively engaged in farming must be a partner or a
				partner's spouse. If the owner of the tract of land is a family farm
				corporation, the designated person who is actively engaged in farming must be a
				family member who is a shareholder of the family farm corporation or the
				shareholder's spouse. If the owner of the tract of land is an authorized farm
				corporation, the designated person who is actively engaged in farming must be
				the shareholder who owns at least 51 percent of the stock of the authorized
				farm corporation or that shareholder's spouse.
If the owner is an individual who leases the land to a family
				  farm corporation or partnership, a shareholder of the corporation or a partner
				  of the partnership shall be considered a designated person if the combined
				  stock of the family farm corporation or the combined partnership interest owned
				  by the owner, the owner's spouse and persons related to the owner within the
				  third degree of consanguinity and their spouses is equal to at least 51 percent
				  of the stock of the family farm corporation or the ownership interest in the
				  partnership.