Many of us are not clear what the various abbreviations mean that our found on our real estate tax statement. How and why property receives homestead classification or non-homestead classification can be a mystery, particularly for those owning agricultural land. Losing homestead classification usually results in higher real estate taxes payable each year but the hidden loss may be the unavailability of the estate tax credit available to farmers. Under current law, qualified farmers have a Minnesota estate tax credit of $5 million. To qualify for these additional credit, the farm must be, among other things, taxed as homestead property. It is very common for retiring farmers to move from the farm to town but the result of such a move may prevent the family from qualifying for the added estate tax credit. As farmers contemplate retirement, a careful analysis of how the farm may retain its homestead classification is critical.
For more information about Minnesota homestead property tax or other estate planning questions, please contact Steve Fink at 507-625-2525.