Watch For A State Capital Gains Deduction for Sale of Farm Assets

We had a reader ask the following question:

“Does Iowa have a reduced capital gains tax rate on sale of farm land held for 15 years?”

If certain qualifications are met such as holding the farmland or assets for at least 10 years and material participation in the farm (can not cash rent the land), Iowa does have an exclusion of 100% of the capital when selling your farmland or other farm assets.  This also applies to other business related assets, not just farmland.

I also know that Oregon had a capital gains exclusion for the sale of farmland, although that may no longer be there.

The key when analyzing your total capital gains tax is to review your state requirements to determine if there is a qualified deduction for the sale of farm assets.  Many states have these exclusions, but there are almost always different rules for each state.