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HF1700 (Legislative Session 94 (2025-2026))

Shareholder limit for entity-owned agricultural property increased.

Related bill: SF776

AI Generated Summary

Purpose of the Bill

This bill aims to modify the property tax laws relating to agricultural property in Minnesota. Specifically, it intends to increase the number of shareholders allowed in entity-owned agricultural properties without losing favorable tax classifications.

Main Provisions

  • Increased Shareholder Limit: The bill changes the maximum number of shareholders, members, or partners allowed in a family farm corporation, joint family farm venture, partnership, or limited liability company from 12 to 20. This adjustment applies to entities classified under specific Minnesota agricultural property laws.
  • Homestead Classification: The bill ensures that certain properties remain eligible for class 1b or class 2a homestead tax assessment even if they are owned by entities with up to 20 shareholders, rather than the previous limit of 12. Such properties must be occupied by a shareholder, member, or partner who is actively farming the land.
  • Extended Property Eligibility: Additional residences owned by these entities on agricultural land and occupied as homesteads by shareholders, members, or partners engaged in farming will also retain homestead classification status.
  • Leased Agricultural Properties: The bill provides that agricultural properties owned by individuals and leased to such corporations or partnerships will receive class 1b or class 2a classification, provided the owner resides on and farms the land, regardless of the lessee's legal possession rights.
  • Nonhomestead Agricultural Properties: Agricultural properties owned by these entities, under specific proximity conditions and utilized as a homestead by a shareholder, can receive the first-tier homestead classification rate.

Significant Changes to Existing Law

  • The change from a 12-person maximum to a 20-person maximum for shareholders involved in a family farm entity is a notable increase, potentially allowing larger family farm operations to benefit more broadly from property tax classifications.

Relevant Terms

  • Agricultural property
  • Shareholder limit increase
  • Family farm corporation
  • Joint family farm venture
  • Limited liability company
  • Property tax classification
  • Homestead classification
  • Farming activity

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
February 26, 2025HouseFloorActionIntroduction and first reading, referred toTaxes

Citations

 
[
  {
    "analysis": {
      "added": [
        "Increases allowable shareholders, members, or partners to 20 under subdivision 8."
      ],
      "removed": [],
      "summary": "The bill modifies the shareholder limit on entity-owned agricultural property homestead classification under section 273.124.",
      "modified": [
        "Clarifies eligibility for class 1b or 2a homestead classification for properties under joint family farm ventures."
      ]
    },
    "citation": "273.124"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "The bill relates to the classification of homestead and agricultural properties under section 273.13.",
      "modified": [
        "Specifies classification criteria for homestead and nonhomestead agricultural properties."
      ]
    },
    "citation": "273.13"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "The bill references definitions under section 500.24 for family farm entities.",
      "modified": [
        "Includes references for family farm corporation definitions and operations."
      ]
    },
    "citation": "500.24"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Refers to definitions under section 322C.0102 regarding limited liability companies.",
      "modified": [
        "References definitions for limited liability companies relevant to agricultural property."
      ]
    },
    "citation": "322C.0102"
  }
]

Sponsors