Farmer

Updates to FSA Microloan Program

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The microloan program, operated by the Farm Service Agency, has recent changes that many farmers will likely appreciate.

First, the loan limit is raised from $35,000 to $50,000.  This means that farmers or ranchers applying for a microloan can now access up to $50,000 for expenses such as:

  • Start-up costs;
  • Input costs (e.g. seed, fertilizer, chemicals, utilities);
  • Marketing and distribution costs;
  • Family living expenses;
  • Purchase of livestock, equipment, machinery or the like essential to the operation;
  • Minor improvements such as wells;
  • Tools;
  • Delivery vehicles; and
  • Irrigation

The above is a small sampling of possibilities to use with microloan funding.

Also of note, microloan funding to beginning and military veteran farmers does not count towards the total number of years a farmer can receive assistance through FSA’s direct loan program.  If you are not a beginning or military veteran farmer, the microloan counts towards the seven year limit in which a farmer can receive FSA direct loan assistance.

If you have any questions about microloans, please feel free to contact us.  We’re always happy to answer your questions!

Nebraska Personal Property Tax Exemption for Beginning Farmers Due November 1

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Nebraska’s beginning farmers and ranchers have a tax program available to them, the Personal Property Tax Exemption.  Applications are due by November 1, 2014 for the 2015 tax year.  The Personal Property Tax Exemption is for beginning farmers, defined as those farming for ten years or less out of the past fifteen.  What the tax exemption provides is:

  • A three year tax exemption on tangible personal property up to $100,000 per year; for
  • Tangible personal property is agricultural or horticultural machinery and equipment.

How do you apply?  The application can be found at the Nebraska Department of Agriculture’s website.  (Note the application is the same as the Beginning Farmer Tax Credit — just check the box for the personal property exemption in the upper-right hand corner.)  You must apply by November 1 of the year preceding the year in which the exemption is to begin.  This means for an exemption starting in 2014, you must apply by November 1, 2013.

Does this mean the Beginning Farmer Tax Credit and Personal Property Exemption must be applied for at the same time?  No!  Does it also mean you must be a beginning farmer throughout the three year exemption?  No — you must only be a beginning farmer in the first year of the exemption.  However, the exemption is a one-time only proposition — you cannot keep applying for it.

This means that you can plan ahead for the optional time to apply for the tax exemption.  If your operation’s business plan is to purchase equipment in years five through seven (and you remain a beginning farmer at year five), you would want to apply for the tax exemption at that time, rather than applying for it immediately.

If you have any questions or require any assistance in applying for the personal property tax exemption, feel free to contact Legal Aid of Nebraska at 855-660-1391 or online here.

Farming Through The Generations; Is There Room For A First-Time Farmer?

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An interesting post at FarmDoc at the University of Illinois posits that first generation farmers will continue to enter farming.  Data published in the article Attributes of U.S. Farms by Number of Generations the Farm has been in a Family in the Journal of the American Society of Farm Managers and Rural Appraiser (2004) indicates that the number of first-generation farmers in 2001 was 36% of all farmers across the random sample of farmers in 26 states.

The possible take-away from this data?  That while farming certainly does have aspects of generational transfer, there is evidence that first-generation farms are a significant portion of farming operations.  The article further argues that there is no evidence that this has changed in the intervening years.

If you are an aspiring farmer, the above is certainly reason to be cautiously optimistic.  If close to 40% of farmers are first-generation, it means there is room in the industry to break-in with your own operation.  It certainly isn’t easy (after all, a bit more than 60% of farmers are second-generation or more) but it is also certainly possible.

Of course, as a beginning farmer, you will still need an idea/plan of your operation; just because it is possible to begin an operation as a first generation farmer doesn’t mean it comes without careful preparation and planning.  It requires knowing not only your farming interests, but also your farming skill-set and the resources available.  Do you need to take a few classes to learn about livestock management?  Hate vegetable farming?  Currently have access to ten acres?   Knowing the answer(s) to these and many other questions are critical to starting your operation.

So, while being a first generation farmer may not have the same concerns as a second or third generation farmer, it is possible to begin your family farm legacy.  So don’t get discouraged if you are a beginning, first generation farmer; know that others beforeyou have trod the same road and succeeded!

Nebraska Personal Property Tax Exemption for Beginning Farmers

/ nelegalaidfarm / 2 Comments

Nebraska’s beginning farmers and ranchers have a tax program available to them, the Personal Property Tax Exemption.  The Personal Property Tax Exemption is for beginning farmers, defined as those farming for ten years or less out of the past fifteen.  What the tax exemption provides is:

  • A three year tax exemption on tangible personal property up to $100,000 per year; for
  • Tangible personal property is agricultural or horticultural machinery and equipment.

How do you apply?  The application can be found at the Nebraska Department of Agriculture’s website.  (Note the application is the same as the Beginning Farmer Tax Credit — just check the box for the personal property exemption in the upper-right hand corner.)  You must apply by November 1 of the year preceding the year in which the exemption is to begin.  This means for an exemption starting in 2014, you must apply by November 1, 2013.

Does this mean the Beginning Farmer Tax Credit and Personal Property Exemption must be applied for at the same time?  No!  Does it also mean you must be a beginning farmer throughout the three year exemption?  No — you must only be a beginning farmer in the first year of the exemption.  However, the exemption is a one-time only proposition — you cannot keep applying for it.

This means that you can plan ahead for the optional time to apply for the tax exemption.  If your operation’s business plan is to purchase equipment in years five through seven (and you remain a beginning farmer at year five), you would want to apply for the tax exemption at that time, rather than applying for it immediately.

If you have any questions or require any assistance in applying for the personal property tax exemption, feel free to contact Legal Aid of Nebraska at 855-660-1391 or online here.