Preserving Family Farms Act to help ease the burden of property taxes
Defining inheritance tax regulations for farmers has been a hot topic this year. In an effort to preserve family farms for generations to come, Rep. Jimmy Panetta (D-CA) and Rep. Jackie Walorski (R-IN) introduced the bipartisan Family Farm Preservation Act.
The legislation would help family farms continue operations after the death of a loved one by easing the burden of estate tax. The bill would modernize the special purpose assessment provision of the estate tax by increasing the amount of farmland that can be assessed for farming operations rather than development value. This would protect family farmland by assessing inheritance tax on the true value of their businesses which they have, in many cases, spent decades cultivating.
“Property taxes on family farms have forced families to divide up the land they’ve spent generations building,” Congressman Panetta said. “Our Family Farms Preservation Act would ease this burden by ensuring that these farms are assessed on their business value rather than development value. This much-needed solution would preserve farmland and protect many Central Coast family farms that keep us food secure.
The Preservation of Family Farms Act 2021 modernizes the special purpose assessment provision of the estate tax. This assessment allows the property to be assessed as agricultural land rather than its commercial development value when determining property taxes. Farm and ranch families who choose to use the special purpose assessment agree to continue operating their farm or ranch business for 10 years. If they stop farming or ranching, sell the farm or ranch outside the family, or change the use of their property, they must repay the forgiven inheritance tax.
Congresswoman Walorski said, “The Family Farm Preservation Act would update existing tax code provisions to ensure that property taxes are based on the value of farmland as it is actually used, and not on their highest potential value if sold for development. This sensible bipartisan bill would give the next generation of farmers a better chance to continue their family’s legacy and keep family farm businesses strong.
The Preserving Family Farms Act would also increase the maximum amount allowed under the Section 2032A exemption from $750,000 to $11 million (indexed to inflation), throwing a critically important tool back in the box. tools of farming families and ranches across the United States. If enacted, this legislation will provide a permanent solution to a problem that has long plagued producers in our country.
Farm groups have long supported efforts to reduce the undue tax burden on farmers and ranchers.
American Federation of Agricultural Bureaux Chairman Zippy Duvall said, “Inheritance tax can have devastating consequences on family farms. The special purpose valuation is an important tool to help farmers and ranchers navigate the difficult estate planning process. Next-generation farmers and ranchers should be able to pay based on the actual use of the land, rather than its potential value as commercial property like an office or warehouse. We call on Congress to pass this legislation.
Jerry Bohn, National Beef Cattle Association The President said, “America’s farmers and ranchers deserve certainty in the tax code as a whole, and they need certainty, especially when it comes to estate taxes. Without it, transition planning for the next generation of growers is nearly impossible.