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A bill to amend the Internal Revenue Code of 1986 to exclude from gross income capital gains from the sale of certain farmland property which are reinvested in individual retirement plans.
4/7/2025, 12:51 PM
Summary of Bill S 930
Under the current tax laws, individuals who sell farmland property and realize capital gains are required to pay taxes on those gains. However, this bill seeks to provide an incentive for individuals to reinvest those gains into their individual retirement plans by excluding them from their gross income.
The Farmland Retirement Act is designed to encourage individuals who own farmland to save for their retirement by allowing them to defer taxes on the capital gains from the sale of their property. This could potentially help farmers and other landowners to secure their financial future and ensure a comfortable retirement. Overall, Bill 119 s 930 aims to provide a tax benefit to individuals who choose to reinvest the capital gains from the sale of farmland property into their individual retirement plans. This could have a positive impact on the financial security of farmers and landowners across the country.
Congressional Summary of S 930
This bill excludes from gross income the gain from the sale or exchange of qualified farmland property to a qualified farmer that is contributed to an individual retirement account (IRA). This generally prevents the federal capital gains tax from being imposed on such gain. (Conditions apply.)
Specifically, the bill excludes from gross income any gain from the sale or exchange of qualified farmland property contributed to an IRA within 60 days of the sale or exchange if
- the requisite election is made,
- the property is sold to an individual actively engaged in farming (qualified farmer),
- the qualified farmer signs a written agreement consenting to the application of a federal tax if the property is disposed of or no longer used for farming within the first 10 years after the sale or exchange, and
- the written agreement is filed.
The bill defines qualified farmland property as real property located in the United States that, for substantially all of the 10 years preceding the sale or exchange, is used by the farmer (or lessee) for farming purposes.
However, under the bill, if the qualified farmland property is disposed of or no longer used for farming within the first 10 years after the sale or exchange, a tax is imposed on the qualified farmer equal to the amount excluded from gross income multiplied by the sum of the highest tax rate on adjusted net capital gains and the net investment income tax rate (currently 23.8%), plus interest.
