It is important to be aware of contracts, leases, zoning by-laws or other easements related to the farm. Such agreements limit the potential uses of the asset in the short term. If the land is currently leased, it may not be available before the lease expires. Individual circumstances dictate the most desirable course of action. In some cases, the land may already be cultivated by the person who inherited it, and the decision may be relatively simple. In other cases, the land may be inherited by someone who knows little about modern agriculture and does not know what to do with the farm. Finally, the farm can be inherited jointly and the wishes of all parties can influence the decision on what to do with the farm. Regardless of the circumstances, every situation is unique and it is important to assess your situation carefully. On November 8, USDA began rolling out more than $185 million in final disaster relief payments for the Wildfire Hurricane Indemnity Program+ (WHIP+) for farm and ranch families who suffered losses from natural disasters in 2019. Just over a month later, on December 10, townships in northern Arkansas and western Kentucky were hit by record tornadoes, resulting in the loss of loved ones, the destruction of homes, and the destruction of barns and containers of grain.
Today`s article provides an update and update on these disaster relief programs, which are valued by farm and ranch families when done in a timely and efficient manner. Eligible farmland must meet all of the following requirements: If farm property eligible for farm relief is replaced by farm property that is also eligible for the exemption (except for the minimum ownership period), all of the following conditions must be met if the original property was donated: buildings must be of a type and size, which is adapted to the agricultural activity carried out. The land is valued as if it could only be used for agricultural purposes. A value higher than this „agricultural value“, such as the market price of a rural estate, is not eligible for agricultural relief. Fifty-eight percent of farms have annual sales of less than $10,000 (2017 Census of Agriculture). Such a small farm cannot feed a family. In these cases, the farmer needs off-farm employment to earn the income he needs. On the other hand, off-farm income can supplement a novice farmer who has a farm with the potential for full-time employment.
Whether the farm is large enough or has the potential to help the heir and his family lead a lifestyle they are accustomed to or aspire to needs to be clarified. According to the 2017 Census of Agriculture, 61% of top operators worked off-farm to generate additional income, and 40% of top operators worked off the farm for 200 days or more. John sold a £2,000 field on his farm to his son David on the neighbouring farm for £500. This means that he is giving David a gift of 75% of the value of the field = £1,500. Leasing land to others is now a viable and common option. The agricultural census revealed that 51% of agricultural land was leased in 2017. A variety of leases are available. Visit the Iowa State University Agricultural Policymakers website for a full discussion of lease agreements. A typical lease agreement includes cash rent, flexible cash rent, or crop share. In a cash flow situation, the tenant bears most of the risk. In a crop-sharing agreement, production and price risk is shared between the tenant and the landowner. A cottage or farm must be occupied by a person engaged in farming, or: Companies whose assets exceed the inheritance tax exemption often have to liquidate some of these assets to meet inheritance tax obligations, which can reach up to 40% of the tax base.
Inheritance taxes are of particular concern for farmers and ranchers because they are based on the market value of the asset. Given the constant appreciation of land and farm assets, this can be very high for farm and ranch families. The restriction of the inheritance tax exemption means that fewer and fewer farming families are protected from inheritance tax each year – a clear risk to the survival of family farms. Determining a fair rental price is not easy. One way to determine cash rent is to set a rate similar to what other people charge in your area. If you use this method, be sure to compare your prices with landowners with land of similar quality. Always compare multiple plans with one or two. Comparing rental prices has its drawbacks because it assumes that others impose a reasonable and fair burden on their tenants. To ensure a fair price, consider average yields, suitability of maize (CSR2) and share of gross crop value. It is in the interest of all parties to maintain the landlord-tenant relationship in a partnership environment, rather than being adversaries. Inheriting the farm as an individual always leaves the same basic options and alternatives: sell the farm, keep it as an investment or cultivate the land. For gifts and estates made after January 1, 2015, where the valuation date is also on or after January 1, 2015, you must: For 2020, the RHS projected that 32,174 agricultural estates would be created from the households of the main farmers, and of these, 0.63% – or 201 estates – would have to file an inheritance tax return, and only 0.16% of the 32,174 agricultural estates would be subject to inheritance tax.
