Tax breaks for small farmers?

[woodchuckie]

Your 30 acres of woods can qualify for it's own tax breaks assuming it is held to eventually sell the timber.

Deductions for tractor,chain saws, expense of making fire lanes and trails ,setting out seedlings, site prep for planting. It gets complicated, I would get an expert.

 

[Slamfire]

The last time the property tax rate was increased, a specialist from the State came to the County building to help reduce taxes for residents. My place split into 3 parts through share and share alike inheritance, was consoldated into one and given the forestry exemption. Result was the $500 a year taxes were reduced to .$360. /forums/images/graemlins/grin.gif
I'd image you'd need to check with your assessors office to find out what your requirements would be.

 

[dooleysm]

Well, I'm not so worried about the taxes on the land. I paid $70 last year on my 10 acres and I just got the assessment for this year, and my assessed value has gone down (in large part due to the influx of modular homes nearby, I'm guessing). The tax breaks I was thinking of were along the lines of fuel for tractor, implements for tractor, cost of pole barn I'm currently building, fence and posts I'll be buying, feed for chickens, etc.

I talked it over with my wife last night and she just rolled her eyes at me (I'm fairly used to that by now though). I may just let this idea die out, but I do enjoy reading about it. I wish I had more time to play with some farming, but I work a 9 hour day and have to commute 50 minutes each way, so there's not alot of free time for me and my "schemes".

 

[Tim_in_IA]

I wouldn't discount it so easily. Just a few of the points you mentioned would make it well worth the $200 for the tax man. You're new building can be a depreciable farm expense, so can fencing, breeding livestock, electricity used for livestock, tractor expenses(some), and on and on. I'd definitely look into it a bit before discounting it.

I have a 1.1hr commute each way to work and I'm making it work /forums/images/graemlins/smile.gif. You can get a lot done on nights and weekends. Although my 11mo old son cut into that quite a bit, but that's a good tradeoff. /forums/images/graemlins/smile.gif

 

[dooleysm]

Well, I guess I will try to look into it some more then. I'm just worried that a fun hobby is going to turn into a bunch of headaches when I get to the end of the year and don't have much money to show and then have to start trying to sell everything in sight.

But I guess being busy sure beats the underground alternative.

 

[Highbeam]

That's the beauty of the tax man. He'll do it for you at the end of the year, no worries. Talk to him now so that you head down the right road and don't have to pay a big penalty at the end. I suppose it could be a tax woman.

 

[slowrev]

Turn your farm into a church, no taxes /forums/images/graemlins/smile.gif
Ben

 

[edski]

Don't worry about showing a profit. My understanding is that it is important to manage your affairs like a business. Keep good records, open a separate checking acct., work with your county ag agent, etc. I've never shown a profit, and have not been audited. Oh well, I'm a lousy farmer. But like a business, I've changed operations, and can document my failures. /forums/images/graemlins/smirk.gif
Mrs edski was complaining about our losses one year. After I showed her the tax savings she really got with it...wanted to write off dog and cat food as vector control. /forums/images/graemlins/grin.gif
My property tax is reduced significantly, ~80%
I avoid state sales tax on farm related items.
No permits required to construct pole barn.
Heck, I even get a check from USDA each year (only $5-6 which I've never cashed).
I do stay away from "red flags" such as home office, writing off PC, or truck.

My advice is to look into it seriously before you decide either way.

 

[Unclebuck257]

Y'all better check with your CPA or accountant BEFORE you do anything with regard to claiming farming or ranching to the IRS. My CPA told me that in order to claim either, and NOT be audited, you cannot be a break even situation, and would need to show a profit. If not, I was told it's one of the bigger RED FLAGS for an audit. I've partied with the IRS boys before and they're no fun at all! As a result of that, and the fact that by the time I pay all expenses for my cattle each year, compared to what I make at the Sale Barn, I'm pretty close to even, or on paper losing money, I decided to just forgo claiming it. My cattle pay for themselves anyway under our Ag Exempt Property Tax laws in Texas each year anyway. That alone saves me a bunch of property tax dollars. I figure I'm still way ahead.

 

[Highbeam]

So we have two things going on here.

1) Property tax exemption (local)
2) IRS farm exemption (federal) + state taxes.

It looks like the easiest and safest is to start with #1 and save several thousand per year. If you can show a profit then #2 is a viable next step to adding much greater savings with somewhat higher risks.

Either one needs an accountant at first IMHO. After the first year, you could probably handle #1 by yourself. #2 maybe if you're good with a calculator and don't change things up much.