Farmland Sales Tax Changes 2025

Yes, there is a significant new tax provision for farmland sales in 2025. Here's what has changed:

New 4-Year Tax Deferral Option:

For farmland sold after July 4, 2025, taxpayers can elect to report the net income tax on gain from the sale of qualified farmland property over a 4-year period in equal installments [1]. This is a completely new provision that did not exist under prior law [3].

Qualification Requirements:

The property must be real property located in the United States that has been used by the taxpayer as a farm for farming purposes, or leased to a qualified farmer for farming purposes during substantially all of the 10-year period ending on the date of sale [1]. Additionally, the property must be subject to a covenant or legally enforceable restriction prohibiting use for any purpose other than farming for at least 10 years after the sale [1].

Payment Structure:

The first installment is due by the due date of the tax return for the year of sale (without extensions), with remaining installments due by the due date of each succeeding tax year [1]. For partnerships or S corporations, the election is made at the partner or shareholder level [2].