NASHVILLE, TN – Farm and forest landowners may have a new tax-planning option when selling qualified land to a qualified farmer. University of Georgia specialist Yanshu Li says the provision applies to tax years beginning after July 4, 2025.
The election allows sellers to pay income tax tied to the gain in four equal annual installments instead of paying the full amount in the year of sale. It does not reduce the total tax owed or change the character of the gain.
To qualify, the land must be in the United States, used substantially for farming during the prior 10 years, and restricted from non-farm use for at least 10 years after the sale.
The provision can also apply to forestland used for timber production. Sellers must use Internal Revenue Service Form 1062 and include the required documentation with the tax return.
Li says the tool may help cash flow, but landowners should compare it with other planning options, including like-kind exchanges.
Farm-Level Takeaway: Landowners selling farm or forest property should review the new deferral option with a tax advisor before closing.