Act 85 of 2012 has greatly enhanced the ability for agriculture
farmers to keep their family run farm business operating even
upon death. This exemption from inheritance tax can be applied to
any persons’ estate where the decedent passed away after June 30, 2012.
In today’s society, running an agricultural business is no easy task.
There are long hours, harsh weather conditions, and little money.
As a result, Act 85 of 2012 provides an inheritance tax exemption for
“real estate devoted to the business of agriculture” to “members of the
same family” in hopes to keep the agricultural culture and family
farms intact for future generations.
REQUIREMENTS
In order to qualify for the tax exemption certain qualifications
need to be met. First, the farm must continue to be devoted to
agriculture for seven years after the owner’s death. The agriculture
farm must generate a minimum gross yearly income of $2,000.
Furthermore, every year surviving family members must be in contact
with the Department of Revenue stating that the farm continues to
qualify for the inheritance tax exemption. However, if the farm does
not meet these requirements during the seven year period, the surviving
family members will have to pay the inheritance tax including interest.
PERIOD OF USE
Act 85 of 2012 focuses on agricultural farming not farming in general.
Therefore, there are limits as to what areas of the farm can be exempt
from the inheritance tax. As long as the farm is being used for agricultural
purposes, it will be exempt. However, recreational areas or sporting areas,
areas used for raising game animals, recreational areas or sporting areas,
fur farming, slaughterhouse operations, and manufacturing and processing
operations will not eligible for the tax exemption.
ADDITIONAL RESTRICTIONS
Lastly, Act 85 of 2012 defines “members of the same family” as parents,
grandparents, brothers, sisters, aunts, great-aunts, uncles, great-uncles
of the deceased owner. Also, any ancestors and offspring of those mentioned
above including spouses. Lastly, adopted persons and half-blood persons are
also considered “members of the same family”.
For more information regarding inheritance tax exemptions, please contact
David M. Frees, III at [email protected] or call 888-573-7407.
