Check out our latest interview with our very own Jamieson Potter and Boa Safra’s Tyler Bruch. They sit down to discuss tax codes, farmland, and eligibility! Watch this video to see if you qualify and to calculate how much you could be saving on your farmland taxes.
Jamie:
Hi Tyler, good to see you again. I appreciate you taking the time to sit down with us. To get started I want to tell folks why we felt it was important to do this interview – I remember when our CEO Corbett called me after speaking with you the first time, it was a Saturday afternoon, he asked me if I had a couple of minutes and then he told me, “so, you aren’t going to believe this, but there is a tax rebate program where I can receive between $1-2,000 per acre back in the form of a rebate.” Corbett had just bought a farm and he was right, I didn’t believe him. He wasn’t so sure it was real either, which is why he worked with you to through the entire process before we would recommend it to our clients. However, now that we know it is legit, we want to help get the word out. That being said, before we dive into details, can you just tell us a little bit more about yourself and your background?
Tyler:
Thanks Jamie. About myself – I am a farmer first and foremost. We farm about 2,500 acres in IA and Nebraska. It’s an all organic operation, in fact if folks want to see our operation in action they can follow us @CycloneFarms on Twitter. I come from a family that has been farming for X generations…
Jamie:
Thanks that’s a great introduction. So now to get to the part folks are waiting for, tell us about the part of the tax code that BoaSafra helps people qualify for.
Tyler:
It’s called Section 180 and it is a part of the tax code, it is not a loophole, and it has been on the books for over 50 years. Basically it allows you to claim a depreciation in the value of the fertility in your soil the same way you might depreciate a piece of equipment that was part of the purchase of a commercial property.
Jamie:
So how does somebody become eligible?
Tyler:
It’s pretty simple, most people qualify with the exception of a REIT if they have recently purchased or inherited farmland.
Jamie:
So you become eligible when ownership changes?
Tyler:
Yes.
Jamie:
And how long after an ownership change is someone eligible?
Tyler:
Well – we normally like to do it within 3 years of a change because filing a change to your tax returns is easier and the fertility data is easier to gather. It is possible to go back further, but it requires good records on what fertilizer was applied during that time and the filing a change to your tax return is harder.
Jamie:
What type of land does this apply to – does it need to be tillable, or can it be pasture or ranchland?
Tyler:
Ranchland, pasture, and cropland all qualify.
Jamie:
So if you bought land or inherited any type of farmland you are likely eligible. Tell me more about how it works functionally. How is the credit calculated and how much can someone reasonably expect to save on taxes
Tyler:
We start by calculating the value of the fertility in your farm at the time of purchase. With current fertilizer prices that can range between $1500-2500 in the midwest. We provide this information to your CPA and they calculate the rebate based on the section 180 code depending on your tax bracket, so say that you bought a 100 acre farm, we calculated residual fertility valued at $1500/acre, that would be $150,000 in residual fertility. If the customer was taxed at 35%that would equal $52,500 rebate.
Jamie:
So you save them $52,000 – that’s real money
Tyler:
Yep.
Jamie:
What’s the biggest rebate you have earned so far, just ball park?
Tyler:
$$$$
Jamie:
And BoaSafra’s role is to calculate the value of the residual fertility right? Do you do any of the filing.
Tyler:
Correct, we calculate the value of the fertility, which has to be done in a certain way, such that it will pass an audit. Your CPA files the paperwork, we will provide them with some guidance, on where to find the appropriate information, but we do not provide tax advice. If somebody needs a CPA, we could provide them with some recommendations of folks that we have worked with in the past.
Jamie:
How much do you charge for your service?
Tyler:
It depends, but we charge between $40-60/acre.
Jamie:
Got it. So basically, you invest $40-60 and likely earn back somewhere between $300 to $600 an acre in the form of a tax rebate. That seems like a pretty good ROI.
Tyler:
Absolutely – a lot of times, folks think it’s too good to be true, but it is a real opportunity.
Jamie:
And I can vouch for that – Corbett, our CEO, worked with you guys, and I know we have helped a lot of our clients work with you.
Tyler, I appreciate the time and you telling us and our customers a little bit more about this opportunity. For folks watching, you can go to BoaSafra.com B-O-A-S-A-F-R-A.com to learn more and speak to Tyler and his team more. You can also reach out to us here at Tillable and we can help start the process with BoaSafra.
