S. Dakota: 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 $520,000.
³To 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,² says Terri LaBrie, South Dakota Department of Agriculture finance administrator. ³The bond program is a great way for a beginning farmer to buy land. It¹s also advantageous for a retiring farmer willing to enter into a contract for deed with that beginning farmer or an individual investor looking to help finance a beginning farmer.²
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. Unfortunately, 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.
The South Dakota Department of Agriculture administers the Beginning Farmer Bond program through the Value Added Finance Authority 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 firstname.lastname@example.org.
Agriculture is a major contributor to South Dakota¹s 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, preserve and improve this industry for today and tomorrow. Visit us online at http://sdda.sd.gov or find us on Facebook and Twitter.
–South Dakota Department of Agriculture
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