No Capital Gains Tax on Family Farms Act

No capital gains tax for family farms

If enacted, you would be able to exclude from your income any gain when you sell or exchange qualified farm property to a qualified family member. The property must have been owned and used as a farm for periods totaling at least 2 years during the 8 years before the sale. Qualified family members include your spouse, your parents, your children (including adopted children), and their spouses. The family member’s basis starts as your adjusted basis, and if that family member does not dispose of the property for the next 10 years, the basis would increase on the day after the 10-year period by the sale-date fair market value minus the carried-over basis. You could elect not to apply the exclusion under rules similar to an existing provision. The Treasury would write regulations, including how the 10-year rule works for partial interests. These rules would apply to sales or exchanges after the date of enactment.