1. The farmer that is renting the land and/or equipment must be a qualified beginning farmer. In order to qualify as a beginning farmer, they must meet the following characteristics:
- Must be a Nebraska resident
- Have a net worth of less than $200,000
- Have farming experience/education
- Plan to seek livelihood in agriculture
- Provide the majority of the day-to-day physical labor and management
- Not closely related to the owner
- Farmed for less than 10 of the last 15 years
2. The owner must be a qualified owner. In order to be considered a qualified owner, you must meet the following characteristics:
- Must be a Nebraska resident
- 50% of your gross annual income, for income tax purposes, must be from farming for more than 5 of the last 15 years
- You must have provided the majority of the day-to-day physical labor and management for more than 5 of the last 15 years
- You must be eligible to receive a state income tax credit
- You must not be closely related to the beginning farmer
- You must rent the property to this beginning farmer for a minimum of 3 years. This means you must have a 3 year lease.
3. The credit is actually a credit for the owner. However, both the owner and the beginning farmer must submit an application to Nebraska. The applications are sent in together and then the application must be approved by the Beginning Farmer Tax Credit Act board.
4. If you do qualify, you will then get a credit for each of the 3 years of 10% of the cash rent received, or 15% of cash equivalent of crop share rent.
As you can see, there are several characteristics that we need to ensure you meet in order to qualify for this credit. On your side of the qualifications, the one we need to ensure works is the 50% of your gross annual income is from farming more than 5 out of the last 15 years. As we look at this, we actually have to look at gross rent income received, your wife’s wages, and gross seed income, compared to farm income. This could create an issue. In addition, we would need to find out more information about the young farmer you are renting to.
Once you have a chance to review this information, please contact me to let me know your thoughts on the qualifications to see if we need to continue going further in gathering information. If you have any questions or concerns, please feel free to contact me.
