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HF2539 (Legislative Session 94 (2025-2026))

Property tax; shareholder limit for entity-owned agricultural property increased.

Related bill: SF2665

AI Generated Summary

Purpose of the Bill

The purpose of this bill is to modify the tax classification rules related to agricultural properties that are owned by entities such as family farm corporations, joint farm ventures, limited liability companies, or partnerships in the state of Minnesota. The bill seeks to increase the number of shareholders or members allowed in such entities without affecting their eligibility for specific homestead tax classifications.

Main Provisions

  • Shareholder Limit Increase: The bill raises the allowable number of shareholders, members, or partners in these agricultural entities from the current limit to a maximum of 12, provided that all owners are related by blood or marriage.
  • Homestead Property Classification: Family farm corporations, joint family farm ventures, limited liability companies, and partnerships are eligible for homestead tax classifications if specific conditions are met. These conditions include having a shareholder, member, or partner residing on and actively farming the land.
  • Additional Residences: Any additional residences owned by the eligible entities that are occupied by members actively engaged in farming can also be classified as agricultural homestead properties.
  • Leased Property Classification: Agricultural properties leased to family farm entities and occupied by an owner engaged in farming can still qualify for specific homestead classification rates.
  • Nonhomestead Property Provision: Nonhomestead agricultural properties located not farther than four townships away from a homestead owned and used by an entity member can be partially classified at more favorable tax rates, provided the proper notification is given to the county assessor.

Significant Changes

  • The bill amends the existing law to increase the shareholder/member limit for agricultural entities from the current lower figure to 12. This change potentially impacts how many individuals can have ownership and still benefit from favorable homestead tax treatments.

Relevant Terms

  • Family farm corporation
  • Joint family farm venture
  • Limited liability company (LLC)
  • Partnership
  • Homestead classification
  • Agricultural property
  • Shareholder/member limit increase

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
March 19, 2025HouseFloorActionIntroduction and first reading, referred toTaxes

Citations

 
[
  {
    "analysis": {
      "added": [
        "Provides clarification on shareholder limits and homestead qualifications."
      ],
      "removed": [],
      "summary": "The bill modifies taxation rules related to agricultural property owned by family farm corporations, joint farm ventures, limited liability companies, or partnerships under section 273.124.",
      "modified": [
        "Adjusts conditions for homestead classification and assessment for properties owned by such entities."
      ]
    },
    "citation": "273.124"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "References to section 273.13 relate to the classification of agricultural properties.",
      "modified": []
    },
    "citation": "273.13"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Definitions related to family farm corporations and partnerships are referenced under section 500.24.",
      "modified": []
    },
    "citation": "500.24"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "Definition of limited liability companies as mentioned in sections 322C.0102 relates to this bill.",
      "modified": []
    },
    "citation": "322C.0102"
  }
]

Sponsors