Kentucky Selling Farmer Tax Credit Program

The Kentucky Selling Farmer Tax Credit program encourages continued use of agricultural land for farming by granting tax credits to selling farmers who agree to sell agricultural land and assets to eligible buyers who will continue using the land for farming operations. Farmers wanting to sell agricultural land and assets may be eligible for a Kentucky income tax credit up to 5% of the sale price of qualifying agricultural assets, subject to a $25,000 calendar-year cap and $100,000 lifetime cap for sales to Actively Engaged Farmers, and a $50,000 calendar-year cap and $200,000 lifetime cap for sales to Beginning Farmers.

Selling farmers cannot have more than 50 full-time employees and must be the legal owner of the agricultural land and assets sold to a buyer. Sales involving immediate family members do not qualify for tax credit consideration.

A Selling Farmer must:

• Be a legal resident of Kentucky;

• If a legal entity required to register with the Kentucky Secretary of State, must be registered and in good standing with the Kentucky Secretary of State;

• Prior to a Sale of Agricultural Assets, is a small business with fifty (50) or fewer full-time employees, and is the sole legal owner of Agricultural Land and any other Agricultural Assets sold to a Beginning Farmer;

A Buying Farmer must:

• Be a legal resident of Kentucky;

• If a legal entity required to register with the Kentucky Secretary of State, must be registered and in good standing with the Kentucky Secretary of State;

• Possesses all licenses, registrations and experience needed to legally operate a Farming operation on Agricultural Land purchased from a Selling Farmer;

• Have not previously held an ownership interest in Agricultural Land used for Farming for a period exceeding ten (10) years;

• Prior to entering into a Sale of Agricultural Assets with a Selling Farmer, has no ownership interest in any of the Agricultural Assets included in the sale;

• Will provide a majority of the management, and will materially participate in the operation of a for-profit Farming operation located in Kentucky and purchased from a Selling Farmer, with the intent to continue for-profit Farming operations on the purchased Agricultural Land for a minimum of five (5) years after the Sale of Agricultural Assets date;

• No owners, or spouses of owners, are Immediate Family Members of any of the owners, partners, members, shareholders or trustees of the Selling Farmer from whom the Beginning Farmer is seeking to purchase Agricultural Assets.

An application fee of $500 must be submitted with the Selling Farmer application. The fee is nonrefundable unless the application cannot be processed due to a lack of available tax credits. There is no application fee for the Beginning Farmer application.

Applying as a Buying Farmer

• Review the KSFTC Guidelines to confirm eligibility.

• Submit a KSFTC Beginning Farmer application (Found below) so that it is received by the Cabinet for Economic Development no later than twelve (12) months after the Sale of Agricultural Assets date (note: cannot submit a Beginning Farmer application until after the Sale of Agricultural Assets occurs).

Applying as a Selling Farmer

• Review the KSFTC Guidelines to confirm eligibility.

• Execute and effectuate a purchase contract for a Sale of Agricultural Assets;

• Submit a KSFTC Selling Farmer application (below) and supporting documentation so that it is received by the Cabinet for Economic Development no later than twelve (12) months after the Sale of Agricultural Assets to a Beginning Farmer, and pay the Selling Farmer application fee (note: cannot submit a Selling Farmer application until after the Sale of Agricultural Assets occurs)

• KSFTC Guidelines