Minneslate Logo

HF2539 (Legislative Session 94 (2025-2026))

Property tax; shareholder limit for entity-owned agricultural property increased.

Related bill: SF2665

AI Generated Summary

Purpose of the Bill

The purpose of this bill is to amend existing Minnesota tax law to increase the shareholder limit for family farm corporations and other entities that own agricultural property. This is meant to update the rules for property tax classifications and ensure certain properties receive appropriate tax assessments.

Main Provisions

  • Increased Shareholder Limit: The bill proposes to increase the number of allowable shareholders, members, or partners in family farm corporations, joint farm ventures, limited liability companies, or partnerships from the current limit to a maximum of 12 individuals, all of whom must be related by blood or marriage.
  • Homestead Classification: It specifies that properties owned by these entities, occupied by shareholders, members, or partners engaged in farming, can be classified under specific homestead tax categories. This classification applies to properties occupied as primary residences by these individuals.
  • Expanded Eligibility: Allows for additional residences owned by these entities on agricultural land to receive homestead classification if occupied by members or shareholders actively involved in farming.
  • Property Leasing: Permits properties owned by individuals who lease their land to family farm entities to be eligible for special tax classifications if the owner resides on and farms the property.
  • Proximity Consideration for Classification: Nonhomestead agricultural properties owned by these entities can receive a favorable tax classification if they are located within a specified distance from the shareholder's homestead property.

Significant Changes to Existing Law

  • This bill amends the shareholder limit for entities to increase their flexibility and operational scope within the agricultural industry.
  • It extends the benefits of certain tax classifications to multiple residences and leased properties under specific conditions, potentially reducing property tax liabilities for these farming entities.

Relevant Terms

  • Family farm corporation
  • Joint family farm venture
  • Limited liability company (LLC)
  • Partnership
  • Shareholder limit
  • Homestead classification
  • Agricultural property
  • Tax assessment

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
March 19, 2025HouseFloorActionIntroduction and first reading, referred toTaxes

Citations

 
[
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "This bill modifies the shareholder limit for entity-owned agricultural property under section 273.124.",
      "modified": [
        "Increases the shareholder limit for family farm corporations, joint family farm ventures, limited liability companies, and partnerships from 12 to a new threshold, allowing more extensive entity ownership."
      ]
    },
    "citation": "273.124",
    "subdivision": "subdivision 8"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "The bill references the definitions in section 500.24 for family farm corporations and partnerships.",
      "modified": [
        "Ensures definitions align with those found in section 500.24 regarding ownership and operational structures of family farm entities."
      ]
    },
    "citation": "500.24",
    "subdivision": ""
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "This reference is made to align limited liability company definitions relevant to agricultural property ownership and operation.",
      "modified": [
        "Clarifies the definition of limited liability companies as it relates to existing statutes."
      ]
    },
    "citation": "322C.0102",
    "subdivision": "subdivision 12"
  }
]

Sponsors