Bill Would Defer Estate Tax on Family Farms

Salazar pushes for action on legislation.

Published on: Jan 23, 2009

Representative John Salazar, D-Colo., reintroduced H.R. 1929, the Safe the Family Farm and Ranch Act, during the first week the new Congress convened. The legislation, which Salazar first introduced in April of 2007, would defer payment of the estate tax on family farms as long as the land is used for ag or conservation purposes.

"All too often what happens is when the children inherit the property they actually have to sell it off in order to pay the inheritance tax," Salazar said. "Our intention is by removing that and utilizing the IRS definition of a family farm, they would then be allowed to defer the death tax until the time the person would decide to sell it for development or something else."

The Internal Revenue Service classifies a family farm as an operation that derives more than 50% of gross income from farming. Currently farms and ranches fall under an inheritance tax rate of 45% after the first $2 million. But due to high land values Salazar said that exemption is often easily exceeded.

"This is not a permanent exclusion, it's only an exclusion if the farm remains in agricultural use by that family," Salazar said. "If it is sold for example for development, then there is a recapture of that tax at the value that it was at the time that it was inherited."

The Save the Family Farm and Ranch Act received the support of several members of the House, including Ag Committee Chairman Collin Peterson, D-Minn., during the last Congress. Salazar's brother Ken introduced companion legislation in the Senate in 2007, but since he has been tapped as the new Secretary of Interior, Salazar has spoken to Senator Mark Udall, D-Colo., about taking the lead in the Senate.

"I think there's great interest in doing this," Salazar said. "There's a lot of people that are very concerned about the open space and our ability to provide food not only for this country but the world."