The Iowa Agricultural Development Authority (IADA) is now accepting applications for an exciting new tax credit program which will help Iowa's Beginning Farmers. The Agricultural Assets Transfer Tax Credit is a program that was created by the legislature and signed by the governor in the spring of 2006.
"The program is designed as an incentive for agricultural asset owners to rent or lease those assets to beginning farmers," says Jeff Ward, executive director of the Iowa Agricultural Development Authority.
"This should provide beginning farmers with enhanced access to those assets needed to fulfill their dream of a career in production agriculture."
More commonly known as the Beginning Farmer Tax Credit Program, the program will provide a State of Iowa income tax credit to agricultural asset owners who lease those assets to qualified beginning farmers. Basically, any capital asset used in production agriculture can qualify for the tax credit. Land, buildings, machinery and equipment, and breeding livestock are common examples of eligible items.
Crop share receives higher credit
Agricultural asset owners can receive a tax credit of 5% of the rental income received for cash rental agreements. For share agreements, they receive a tax credit of 15% of the value of the product subject to the lease. The lease must be for a minimum of two years and a maximum of five years, and it must be a written lease agreement, says Ward.
To be eligible, the beginning farmer must have a net worth less than $300,000 and actively participate in the management and labor of the assets under lease. In addition, the farmer must have access to adequate machinery and equipment and sufficient working capital.
To apply for the credit, both the agricultural asset owner and the beginning farmer have to complete a simple application. Both applications are submitted to the IADA office along with the beginning farmer's financial statement to verify net worth, a copy of the lease and a background letter explaining the project.
Interested applicants may contact the Iowa Agricultural Development Authority at (515) 281-6444 or [email protected]. The applications and other information can also be found at the IADA Web site www.iada.state.ia.us.