Financing Beginning Farmers
South Dakota Department of Agriculture
For Immediate Release: April 12, 2017
Media Contact: Jody Heemstra 605.773.4073
***This release contains links to audio***
Financing Beginning Farmers
PIERRE, SD-- Bond purchasers can potentially save thousands of dollars in federal taxes by investing in a beginning farmer.
Through the Beginning Farmer Bond program, the South Dakota Value Added Finance Authority (VAFA) issues tax-exempt bonds for qualifying beginning farmers to purchase agricultural land at lower interest rates. The limit on a beginning farmer bond is $524,200.
“The beginning farmer bond program has different eligibility criteria than other governmental programs, so I would encourage producers to contact us if they are purchasing agricultural real estate,” says Terri LaBrie, finance administrator for the South Dakota Department of Agriculture (SDDA). “To be eligible for the program, an applicant must be at least 18 years old, a resident of South Dakota, have a net worth under $400,000 and own less acres than 30 percent of the county median.” (***Download LaBrie1 audio here***)
Typically the Beginning Farmer Bond program works through a local lender. However, if a retiring farmer is interested in passing on his or her land to a beginner farmer, the interest from that contract sale is federally tax exempt-- providing substantial savings to the seller. There are regulations prohibiting this type of transaction with closely related parties such as parents or grandparents so a third party lender is required in those cases.
“Not only is this a great way to get our kids back on the farms and staying in South Dakota, it also helps retiring farmers pass on their land to a qualifying beginning farmer with a contract for deed while saving money on their federal income taxes,” says LaBrie. (***Download LaBrie2 audio here***)
SDDA administers the Beginning Farmer Bond program through the VAFA board. The board meets monthly and reviews the applications for the program and issues the bonds for approved projects. Board members include: Bob Hull, Sisseton; Mark Gross, Sioux Falls; Jim Schmidt, Lennox; Chuck Jepson, Ft. Pierre; Jim Doolittle, Belle Fourche; Marcia Hendrickson, Chancellor; and Nathan Jensen, Beresford.
For information on the financial programs offered through SDDA, please contact one of the board members or Terri LaBrie, finance administrator, at 605.280.4745 or email@example.com.
Agriculture is a major contributor to South Dakota’s economy, generating $25.6 billion in annual economic activity and employing over 115,000 South Dakotans. The South Dakota Department of Agriculture's mission is to promote, protect and preserve South Dakota agriculture for today and tomorrow. Visit SDDA online at http://sdda.sd.gov or find us on Facebook and Twitter. SD Ag Chat podcasts can be found in the Ag News section at http://sdda.sd.gov/news. You may subscribe, free of charge, through Google Play Music, iTunes or from https://sdagchat.podbean.com/.