Becoming a farmer? & Tax Exempt on Tractor

[boostmg]

ok ... i have 30 acres ... going to buy a tractor to maintain it, and plant food plots.

I am aware that tractors for "farm use" are tax exempt. I would not mind getting into farming but if i get into farming does that mean the government will then come do inspections or do any other types of check ins?

Is there something i have to do to become a "farmer" and have a "farm"?

I don't want to deal with any hassles, I would just like to grow something like hops and sell to local brewery, or perhaps other vegetation in a small way.

 

[Industrial Toys]

Major tax advantage on this hundred acres. Very lax system.

We were looking at a 5000 series JD. When I by accident saw a 6000 in the dealers shop, I lost total interest in the 5000. Turns out there was no HST (Tax) on the larger tractor!

 

[forgeblast]

Ohio Agricultural Sales Tax Exemption Rules. lists how its done in ohio.

 

[fried1765]

I considered cranberry growing in SW Nova Scotia, but a bit of research into the provincial socialist labor regulations, quickly drove that idea out of my head.
Would be much more profitable to grow cranberries in China, but....I ain't goin there!

 

[BoylermanCT]

In CT you have to have farm income of $2500 to get a sales tax exemption. To get property tax exemption, the income requirement is $15,000. Each state will be different. In CT anything you buy using the farm exemption has to be 100% for farming. If you use it partially for other purposes, you lose the tax exemption. If you don't generate the required $2500 in income (and report it on your taxes) you lose the exemption and have to pay sales tax on items previously claimed as exempt. If you are farming for a business, you should be OK. If you are trying to save sales tax on a hobby, probably not the thing to do.

 

[Larry Caldwell]

For federal income tax you have to have farm income and file a Schedule F. They're not happy if you declare a loss year after year, but you can write off equipment, maintenance, etc. against profits. My dad amortized his farm shop, and you can amortize the cost of the land and mortgage interest as a business expense. Don't take my word for it, but talk to a good tax accountant.

 

[Hay Dude]

It would help to know what your 30 acres is like (fields, woods, etc). Before you plant anything, you need to know your soil conditions for what you want to grow. I
There’s a lot of misinformation out there. Be careful and understand obviously “food plots” don’t qualify.
Some people get “property tax” rebates on land confused with “sales tax” exemptions on equipment.

 

[fishheadbob]

A very general rule of thumb is that your agricultural activity has to be conducted with a profit motive. Food plots aren't likely to meet that idea.
If your primary concern is sales tax on machinery you can always look for a private seller (like Craigslist, etc.) where sales tax isn't usually an issue, whereas the tractor dealer down the road pretty much has to ask.
Rules and regulations vary state by state.

 

[Frankenkubota]

For federal income tax you have to have farm income and file a Schedule F. They're not happy if you declare a loss year after year, but you can write off equipment, maintenance, etc. against profits. My dad amortized his farm shop, and you can amortize the cost of the land and mortgage interest as a business expense. Don't take my word for it, but talk to a good tax accountant.

that's what i just did. I own a tree farm and i qualify. Initially I had to submit some kinda plan but the forestry guy just copied the previous owners. just a bunch more paper.

first year filing as a farmer was last year, didn't do the schedule F and just had to refile 2019 taxes to include the schedule F because ...... some govt dept of ? demanded my tax returns....along with a schedule F.

My tax preparer said, because i had zero expenses and zero income, the computer wouldn't accept the filing so she stuck in $10 travel expenses. more BS.

i have a feeling that's gonna comeback to haunt me.

 

[RickB]

that's what i just did. I own a tree farm and i qualify. Initially I had to submit some kinda plan but the forestry guy just copied the previous owners. just a bunch more paper.

first year filing as a farmer was last year, didn't do the schedule F and just had to refile 2019 taxes to include the schedule F because ...... some govt dept of ? demanded my tax returns....along with a schedule F.

My tax preparer said, because i had zero expenses and zero income, the computer wouldn't accept the filing so she stuck in $10 travel expenses. more BS.

i have a feeling that's gonna comeback to haunt me.

One can only hope.