Governor Corbett recently signed new tax legislation into law and portions of that new law go to benefit farmers.
Real estate transfer tax is required to be paid on every real estate sale unless it is specifically exempt or excluded. The new exemption excludes a transfer from family members to a family farm business. The relevant portions of the new law are set forth below.
Excluded Transactions.–The tax imposed by section 1102-C shall not be imposed upon: [(19.1) A transfer of real estate devoted to the business of agriculture to a family farm partnership by a member of the same family, which family directly owns at least seventy-five per cent of the interests in the partnership.]
(20) A transfer between members of the same family of an ownership interest in a real estate company[,] or family farm [corporation or family farm partnership which] business that owns real estate.
“Family farm business.” A corporation or association of which at least seventy-five per cent of its assets are devoted to the business of agriculture and at least seventy-five per cent of each class of stock of the corporation or the interests in the association is continuously owned by members of the same family. The business of agriculture shall include the leasing to members of the same family or the leasing to a corporation or association owned by members of the same family of property which is directly and principally used for agricultural purposes. The business of agriculture shall not be deemed to include:
(1) recreational activities such as, but not limited to, hunting, fishing, camping, skiing, show competition or racing;
(2) the raising, breeding or training of game animals or game birds, fish, cats, dogs or pets or animals intended for use in sporting or recreational activities;
(3) fur farming;
(4) stockyard and slaughterhouse operations; or
(5) manufacturing or processing operations of any kind.
A transfer of real estate devoted to the business of agriculture to a family farm [corporation] business by:
(i) a member of the same family which directly owns at least seventy-five per cent of each class of the stock thereofor the interests in that family farm business; or
(ii) a family farm business, which family directly owns at least seventy-five per cent of each class of stock thereof or the interests in that family farm business.
Click here to view Act 85 of 2012 in its entirety.
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