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Q:  What kind of farm deduction is allowed?


The value of farm land and farm equipment can be deducted from the taxable value of an estate as long as either the land or equipment comprise at least half of the total value of the estate and meet other statutory requirements. This is in addition to the applicable $1.5 million or $2 million deduction cited above. The heirs to the farm land and farm equipment are not required to repay the difference in the tax if the heirs do not continue farming.

A tenant farmer who did not own farmland, or who owned only a small amount of farmland (less than 25 percent of the value of the gross estate), can deduct the value of the farmland and tangible personal property used for farming purposes if the value of the tangible personal property equals or exceeds 50 percent of the decedent's gross estate.

More information
More information about estate tax for deaths on or after May 17, 2005
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