What is a Special Agricultural Homestead?
The Special Agricultural Homestead provision extends homestead status to property that is owned under a trust and farmed by the grantor, the spouse of the grantor, or a child, sibling, grandchild, or parent of the grantor or the grantor’s spouse who do not live on the farm. Homestead status mayresult in less property taxes than property that is not homesteaded.
Definitions
What is a trust? A trust is a legal term to describe an ownership arrangement of a piece of property or assets.
Who is the grantor?The grantor is the person(s) who created or established the trust.
Who is the trustee? The trustee is the person or entity who has the custodial duties. This person or entity oversees the trust. Often a trustee is a disinterested third party like a bank or a law firm, but a trustee can be anyone.
Who is the beneficiary?Anyone who receives any kind of benefit from a trust is a beneficiary. For example, if you had the right to live onproperty held under a trust, you would be a beneficiary.
What property qualifies?
In order to qualify for the special agricultural homestead classification for property held under a trust, the agricultural property must be at least 40 acres.
The grantor of the trust must:
- be a Minnesota resident;
- not claim another agricultural homestead in Minnesota (and neither can the spouse); and
- live within four townships or cities of the property heldunder trust.
The person who is actively farming the land must:
- be a Minnesota resident;
- live within four townships or cities of the property; and
- be the grantor of the trust, the spouse of the grantor, or be either the child, sibling, grandchild, or parent of the grantor or of the grantor’s spouse.
What does “actively farming” mean?
A person actively farming must participate in the day-to-day labor, decision making, and management of the claimed homestead. They also must assume all or part of the financial risks of the farm. The person does nothave to live on the farm.
Actively farming does NOT include:
- allowing someone other than the owner, the spouse, orthe child, sibling, grandchild, or parent of the grantor or of the grantor’s spouse to farm the land;
- just driving a truck to pick up supplies; or
- just “doing the books.”
What do I need to apply?
- An application form, which is available from your county assessor’s office.
- The Farm Service Agency (FSA) number of the person actively farming.
- Form 156 EZ from the FSA for the person activelyfarming.
- The Schedule F form or an equivalent form that was filed with the federal income tax return of the person actively farming. An affidavit from your tax preparer or attorney verifying that you have filed the form can be substituted instead of the form.
- A copy of the Articles of Incorporation that identifies the grantor of the trust.
Other important information
You must file the Special Agricultural Homestead application every year by December 15. It is recommended that you file near the end of the crop year.
The application must be filed in each county in which homestead is requested. If your property crosses a county line, then make sure to apply in each county. The assessor’s office will accept copies of the application so you don’thave to fill out the form twice.
If you have further questions, please contact your county assessor’s office.
This fact sheet is intended to help you become more familiar with Minnesota tax laws and your rights and responsibilities under the laws. Nothing in this fact sheet supersedes, alters, or otherwise changes any provisions of the tax law, administrative rules, court decisions, or revenue notices. Alternative formats available upon request.
The content of this and any related posts has been copied or adopted from the Minnesota Department of Revenue Property Tax Fact Sheet 4c.