This bill would allow farmers to sell their farm property to family members without paying capital gains taxes on the profits from the sale. The tax exclusion applies to real property that has been actively farmed for at least two years during the eight years before the sale, and can only be used when selling to qualified family members including spouses, children, grandchildren, and their spouses. The buyer would take over the seller's original tax basis in the property, but if they hold the farm for at least ten years without selling it, their tax basis would increase to reflect the property's fair market value at the time of the original sale. The bill would take effect immediately upon enactment and would apply to all farm sales to family members after that date. This legislation effectively eliminates capital gains taxes as an obstacle to passing family farms to the next generation.
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