What is a fair rental price for my tractor?

[slewisma]

Rentals of units similar to yours run in the $350 - $450 per day range around here. 1/2 day is around $190 - $240. That doesn't include delivery and pickup which can add $50 to $150 depending distance.

Do check your insurance situation as others have suggested. Consider your time too. 3 miles each way plus time doing the work can add up. Fine for a one time thing but could add up if they keep finding more things for you to do. The savings in labor, even if they paid full equipment rental rates will make you the clear best option for any job they need done.

I'm sure it is a worthy cause and one you care about. Just set some reasonable ground rules for how much time (yours and the tractor's) are available.

 

[ragkar]

In the CAP (Civil Air Patrol) on search missions I donate the use of my plane and the Air Force pays for the fuel. So that's the minimum that they should contribute. Keep a log of home-to-center and return use. Lucky that you have a 'time' odometer on your tractor.

 

[ihookem]

I rent my Bota 7510 to our church to cut grass at a price of 300 per day. They don't give me any money, but it is counted as a "giving". At the end of the year I give them a record and they give me a receipt. This way I get a tax write off of 300 dollars at the end of the year. Last year it came to 5100 dollars. Most of the time I'm the one cutting grass though.

 

[tallyho8]

I rent my Bota 7510 to our church to cut grass at a price of 300 per day. They don't give me any money, but it is counted as a "giving". At the end of the year I give them a record and they give me a receipt. This way I get a tax write off of 300 dollars at the end of the year. Last year it came to 5100 dollars. Most of the time I'm the one cutting grass though.

But even though you claim the $5100 as a write-off, I am sure that you also claim the $5100 as income also as IRS rules state.

 

[CurlyDave]

In a lot of ways this depends on the nature of your job with the farm.

Are you a salaried employee with regular benefits, part-time or an independent contractor?

If you are a salaried employee I think the rental yard pricing is an excellent way to go. Do your homework and get a rental cost list from a local yard. Then give them a substantial discount -- say charge a half day rental for a full day of work. This is still going to be enough that they will not want to "overuse" you and your machine.

You need to have a discussion with your insurance agent. This may or may not fall into the "commercial use" area as your company defines it. If you have a good agent, he may be able to suggest an arrangement which would work out without requiring additional insurance. If not, the farm should pay for the policy.

I loan out myself & my machine to my neighbors at no cost for small (a few hours) jobs just because of the insurance issue. I am covered for liability off my property, but not for theft or damage to the tractor. In your case, theft is not an issue since you will be taking the tractor back & forth with you and sitting on it most of the other time. As soon as I take even a nickel of payment, I become commercial and need a different policy.

The biggest issue with the arrangement you suggest is that it pollutes the employer-employee relationship. You are the owner and master of the tractor, they are your employer. Confused lines of authority frequently lead to misunderstandings and hard feelings. What happens when they want you to do something which you feel is unsafe? What happens when your boss starts to think you are charging too much for the use of your tractor, is he going to speak up or just harbor a lingering resentment? What about if you make a mistake, or do a job in a way which they feel is inefficient, leading to more hours and a higher cost to them?

About the cleanest way to do this is if you are an independent contractor. But you may not want that relationship, especially if you are spending less than 10% of the year with your tractor. It is a lot harder on you -- you have to supply your own benefits, tax withholding, matching SS contribution, etc. OTOH, they should increase your pay level to reflect that, and the savings to them by not paying for your benefits, etc.

If you end up using the tractor more than one day per week for an extended period, talk to them about becoming an independent contractor. This clarifies the confused lines of authority inherent in being an employee and using your own equipment.

 

[Botabill]

For what it's worth... I arbitrarily charge $35 per hour for the rental of my tractor with operator. I figure the operator is worth $20 per hour and therefore I'm charging $15 per hour for the tractor. This is a case of the operator (me) is trustworthy and won't be too hard on the machine.

If a person is a business then yes the IRS would expect income tax on the money exchanged. As a hobby I don't think that is the case. Let's face it a hobby may bring in some money but way more is spent on it.

 

[npaden]

Trust me, you guys don't want to know the rules on hobby income. They are very complex and they are not in the taxpayers favor.

Basically under the IRS regulations you have to report 100% of any money that is received but you can only deduct your expenses subject to a 2% of Adjusted Gross Income Limitation (If you make $50,000 you only get to start deducting expenses after they are over $1,000) and then you can only deduct your expenses up to the amount of the money received. There is a LOT more to it than that but that is very basic summary.

In the example of the guy receiving a donation for the tractor use by the church he should report $5,100 of income, then he could deduct an appropriate % of useage on his tractor depreciation and maintenance (subject to the previously mentioned 2% of AGI limitation) and then also deduct the $5,100 as a charitable contribution. So basically you come out ahead on being able to deduct some expenses on your tractor subject to the AGI limitation.

 

[Gary Fowler]

I just had some backhoe work done with a commercial sized rubber tire machine and it was $100 per hour which was all inclusive of mobilization, fuel and operator.

 

[Tig]

I'm just looking to nail down what actual cost to operate really is for maintenance and initial cost etc.

On a car rule of thumb is triple the fuel cost. That should cover insurance, maintenance, repairs and depreciation on a car. It would be much higher on a tractor, but if you base it on fuel use you have a fair start point.
Find out what daily rental is. Divide by 8 hours. There is a bargain price for one hour of tractor rental. I'm not sure but I think fuel would be extra.
Using those two references you should be able to come up with fair price.
My opinion would be 4 to 5 times the cost of fuel.

 

[LoneCowboy]

$60 + /hour (and a 30hp tractor with a 5' cutter rents for $400/day , so I"m not far off)
minimum

with operator, $90 to $120 per hour

below that, you are not accounting for all costs. Or, you are operating illegally (permits, fees, licenses, insurance, etc)

Just do it for free for your neighbors/church/whatever.

Your example especially of digging with your backhoe? Ever priced excavator's insurance? it's not cheap for a reason. Doing it for free, you are a good samaritan. You get paid, you are a contractor, better not hit anything.