Bills › 88th General Assembly
Relating to taking a capital gain deduction for the sale of real property used in a farming business. Effective 7-1-19
Sponsored by the House Ways and Means Committee
Topics:AgricultureTaxes
Where it is now
- Done: IntroducedFebruary 5, 2019
- Skipped: SubcommitteeSkipped
- Done: House committeeApril 17, 2019
- Done: Passes the HouseApril 24, 2019
- Skipped: Senate committeeSkipped
- Done: Passes the SenateApril 25, 201949–0
- Done: To the GovernorApril 29, 2019
- Done: Signed into lawMay 21, 2019
Signed into law What’s a funnel?
What’s in it
This bill modifies the capital gain deduction for the sale of real property used in a farming business enacted in 2018 Iowa Acts, chapter 1161, section 113. The capital gain deduction for the sale of real property used in a farming business is set to begin in tax year 2023 or in a later tax year, contingent upon the satisfaction of certain net general fund revenue amount and growth targets. Currently, the capital gain deduction for the sale of real property used in a “farming business” set to go into effect in 2023 or a later tax year restricts the deduction to the sale of “real property used in a farming business”, provided the taxpayer “materially participated” in the farming business for at least years, held the real property for at least years, and sold the real property to a “relative”, all as defined in 2018 Iowa Acts, chapter 1161.
Read the full explanation
The bill modifies the restrictions relating to the deduction for the sale of real property used in farming business by permitting the taxpayer to take the deduction if one of the following apply: the taxpayer “materially participated” in the farming business for at least years and held the real property for at least years; or the taxpayer sold the real property to a “relative”. The bill expands the definition of “relative” to include an entity in which a relative of the taxpayer has a legal or equitable interest in the entity as an owner, member, partner, or beneficiary. The bill also modifies the definitions of “farming business” and “real property used in a farming business”.1, which is used in the definition of farming business. The bill strikes provisions related to restricting the capital gain deduction for the sale of real property used in a farming business if the relative sells or transfers the real property used in a farming business within five years of the original sale.9 (deductions from net income). The bill does not change the future effective date of the capital gain deduction for the sale of real property used in a farming business.
Fiscal note
Less revenue: up to $227,000 Compare with other bills
8 million per fiscal year. In addition, revenue raised by the local option income surtax for schools will be reduced by $227,000 per year. Both revenue reductions will begin FY 2024. Source Department of Revenue /s/ Holly M. Lyons June 3, 2019 The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code.
- Final Fiscal Note - Farming Capital Gains Tax Exemption · June 3, 2019
- Farming Capital Gains Tax Exemption · April 19, 2019
- Farming Capital Gains Tax Exemption · April 19, 2019
- Farming Capital Gains Tax Exemption · March 18, 2019
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