Gluesenkamp Perez leads bill aimed at protecting generational farms

May 15-Last month, U.S. Rep. Marie Gluesenkamp Perez, D-Skamania, and Rep. Thomas Massie, R-Kentucky, introduced the bipartisan No Capital Gains Tax on Family Farms Act to remove capital gains on the sale or exchange of a farm between family members provided that the land stays in agricultural production.

"The health of our nation is married to the wealth of our soil and generational stewardship - this bill recognizes that traditional financial models like 30-year mortgages are out of sync with the long work of building healthy soil," Gluesenkamp Perez said in a news release. "When a loved one dies and ag land is split up to pay tax bills, it disrupts the generational work that it takes to build healthy soil. We can't treat land like any other financial asset, as though we're just dividing nickels and dimes, and expect good results."

Under current law, if a farmer were to sell their land to a child and retire, the transfer would incur capital gains taxes of up to 20 percent. The congresswoman's legislation changes this by excluding agricultural land transfers between parents, children and spouses from capital gains tax as long as the land continues to be used for farming, timber and other agriculture activities. This bill will make it easier for farmers to sell down to their kin, keeping more farms with families, according to the release.

The bill would:

-Allow the sale or transfer of family farms to qualified family members without the seller being subject to capital gains tax;

-Prevent immediate resale to developers or corporations through a 10-year anti-flip rule;

-Preserve the seller's original tax basis during the 10-year holding period to ensure deferred gains are taxed if the property leaves the family;

-Provide a step-up in basis to fair market value if the farm remains within the family for at least 10 years after the initial transfer.

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