41-185: IA 100H Capital Gain Deduction - Nonretired Farmer 41-185 (2025)
Iowa · Iowa DOR · Used for tax years 2025
The 2025 IA 100H is used to claim Iowa’s capital gain deduction for the sale of real property used in a farming business. It reports details about the property sold, ownership, and the taxpayer’s participation in the farming business.
Who files this form
Use the 2025 IA 100H if you are claiming an Iowa capital gain deduction for the sale of real property used in a farming business. Include the completed form with your IA 1040 Iowa Individual Income Tax Return.
- This form is only for sales occurring on or after January 1, 2023.
- For installment payments from sales that began before January 1, 2023, use IA 100B.
- Retired farmers making the lifetime election to exclude qualifying capital gains should use IA 100G instead.
- Capital gains reported by a C corporation are not eligible for this deduction.
Complete a separate IA 100H for each property sale. For a qualifying installment sale, complete the entire form each year.
What you'll need
Have the following information and supporting records ready for the parts of the form that apply to your sale:
- The property address or legal description, county, location description, and total acres sold.
- Documents showing the acquisition and sale dates. If your ownership period was less than 10 years, an explanation of how the holding period qualifies under Internal Revenue Code section 1223.
- Records for the 10 years immediately before the sale showing land managers, whether they were paid, the federal forms or schedules used to report income, and acres used for each farming or rental activity.
- Records supporting your material participation, including your duties and the years you performed them. Records prepared long after the activity are generally not acceptable.
- Your ownership percentage, other owners' names, how you acquired the property, and buyers' names and relationships to you.
- For an installment sale, the first and expected final installment dates, total capital gain, and capital gain received in the current tax year.
If you claim the material participation test on Part II, line 6d or 6f, include the separate explanatory statement required for that test.
How to file
Include the completed IA 100H with your IA 1040 Iowa Individual Income Tax Return. Enter the deduction in Part III, line 7, and include it on IA 1040 Schedule 1, line 16.
Prepare a separate IA 100H for each property sale. Complete all parts each year of a qualifying installment sale.
The supplied text does not provide a mailing address or e-file directions.
Common mistakes
- Reporting acreage totals that do not match. For each year, the acres personally farmed, cash-rented, crop-shared, enrolled in CRP, and used for other purposes must add up to the total acres sold in Part I, line 2.
- Assuming cash rent proves material participation. The instructions say cash-basis rental generally does not establish material participation. The landlord must show participation in the farming activity.
- Ignoring other people's work when claiming line 6b or 6c. These tests require considering everyone who participated, including employees and nonemployees.
- Relying on records created long afterward. Farming activities must be supported by records. Records prepared long after the activity are generally not acceptable.
- Including interest in installment-sale gain. Do not include interest received in Part III, line 6.
- Including ineligible amounts in the deduction. The deduction applies to net capital gain. Nonrecaptured losses treated as ordinary income are not eligible.
Questions people ask
What if I sold the property to a relative?
Check “Yes” in Part I, line 3, and continue to Part III, line 1, as directed. The instructions define a relative to include qualifying relationships by blood or marriage, lineal descendants, and entities in which a qualifying relative has a legal or equitable ownership or beneficiary interest.
Do I need a new form each year for an installment sale?
Yes. Complete the entire IA 100H, including all parts, each year of a qualifying installment sale. Installments from sales that began before January 1, 2023, belong on IA 100B instead.
How do married owners report their ownership percentages?
If you file jointly and you and your spouse are the only owners, enter 100% in Part III, line 2. If you file separately and both spouses own the property, each spouse must complete an IA 100H showing that spouse's separate ownership percentage.
Can the Iowa Department of Revenue ask for more information?
Yes. The deduction is subject to review. The Department uses this form to verify eligibility and may request additional information.