The Qualified Farm Property exemption is available to farmers who sell their property, but only for the portion of land that qualifies as ‘farmed’.
Elements of a ‘Farm Sale’
A ‘farm sale’ can really be classified as the sale of at least 4 separate things including, farmed land, brush (non-farmable), residential and farm equipment.
Residential Portion
The residential portion of the sale is tax exempt under the ‘principal residence exemption.
Equipment
Equipment is deemed sold at fair market value which is normally around the written off value on the books, so that is usually not much of a tax issue.
Tip
Depending on the value of the farmland in the sale, it may well be worth an effort to clear out any brush land or unusable part of the property more than 24 months before the sale. The cleared property could then qualify for the ‘tax-free’ status of farmland.
Of course this takes hard work, but may be well worth the time from the tax perspective.