Can I Defer the Tax on Selling Farmland

OBBBA added a new provision that allows farmers to defer paying tax on sale of farmland

Photo by Lukasz Szmigiel on Unsplash

The One Big Beautiful Bill Act added new code section 1062 that allows most farmers who sell farmland to another farmer to elect to defer paying the tax over essentially a three-year period.

The requirements are as follows:

• The land must be sold to an active farmer who will agree in writing with a deed encumbrance (likely) to actively farm it for at least 10 years.

• The seller of the farmland can elect to pay the tax in four annual installments due April 15 each year.

• If the farmer misses one payment, then all remaining payments are due immediately.