HF1423

This bill proposes an amendment to Minnesota Statutes 2024, section 273.124, subdivision 8, concerning property tax classification for agricultural homesteads owned by entities such as family farm corporations, joint family farm ventures, partnerships, and limited liability companies.

Key Provisions:

1. Increase in Shareholder Limit:

   • The maximum number of allowable shareholders, members, or partners in these farming entities is proposed to be increased from 12 to 18.

2. Homestead Property Classification:

   • Entities that operate family farms and meet the ownership and farming engagement requirements can qualify for class 1b or class 2a property tax assessments.
   • Homestead status applies even if the legal title to the property is held by the entity rather than the resident farmer.
   • Additional residences on agricultural land, owned by the entity and occupied by shareholder-members engaged in farming, also qualify for homestead classification.

3. Leased Agricultural Property:

   • Agricultural land owned by a member, partner, or shareholder and leased to the family farm entity remains eligible for class 1b or class 2a assessment if the owner resides on and actively farms the land.

4. Nonhomestead Agricultural Property:

   • Nonhomestead agricultural land owned by an eligible farming entity within a defined distance from a homestead property may receive the first-tier homestead tax rate on any property value in excess of the individual farmer’s homestead value.

This bill aims to support family farms by expanding eligibility for agricultural homestead tax benefits and allowing more shareholders within farming entities.