Possible tax changes could be death of some multigenerational farms
Potential tax law changes could doom some multigenerational farms.
Farmers National Company senior vice president Randy Dickhut says it’s all speculation for now, but if the Biden administration does away with stepped up basis or reduces the estate tax exemption, it would likely bring about the sale of more land.
He points to Canada, where there is no estate tax but are capital gains taxes upon death.
“You pass away and the value of your land increase over what you bought it or inherited it for is going to be taxed, so farmers who retire in Canada are a little more likely to sell their land (according) to what we saw in our work there.”
That’s because those farmers either don’t want to pay the tax or can’t afford to.
Dickhut tells Brownfield the farmland market would become more active if similar tax policies were implemented in the U.S.
“It would bring more liquidity into the land market, more opportunities for people to buy because a farm normally only sells once every three or four generations. So there’s not a lot of liquidity in some areas.”
During his campaign, President Biden touted tax reforms that included cutting the estate tax exemption of more than $11 million in half.