Tax Advantages
How would you like to trim your tax liability? Alpacas, as well as other types of livestock, are the answer. Alpacas are by far, the easiest to manage ..... ask any large animal Vet who has worked with alpacas!!
There are two ways of investing in alpacas. The active, or hands on method, where you actively raise your animals yourself for profit, and the passive, or agisted method, where you invest in the animals and someone else does the farming.
You can choose to enhance your real estate, purchase animals, and deduct expenses directly against earned income. If you prefer to agist or board the animals, you can capture the expenses and cost of the animals against passive income now and 15 years into the future. Tax deferred wealth building is another benefit. Taxes are postponed on the increased value until you are ready to start selling the offspring.
Many alpaca breeders throughout the United States have recognized financial and personal gains. The rewards are many. Their initial investment has grown to a level that creates independence. Individuals have recognized that their current careers can be incorporated into alpaca breeding with positive results.
As a breeder you can depreciate a male or female alpaca used for breeding purposes over a five-year period. Breeding animals are considered a capitol asset. Furthermore, the first year that the capitol asset is acquired, there is a hyper depreciation of $100,000 which can be used as a business expense item. (See IRS Publication 225 section 179). In addition, production animals or equipment purchased in excess of this deduction can be depreciated over five years. Income derived from the sale of capitol assets is usually taxed at a lower rate than that of income derived from other sources, such as regular earnings. Any expenses, which you incur, such as veterinary care, feed bills, or any other costs associated with the raising and marketing of your alpacas, are deductible. As an active breeder there is also the ability to depreciate tangible property, such as barns and fences, as well as breeding stock to be considered.
If you agist your alpacas your tax advantages will vary from that of an active owner, but they will still be very attractive. The main difference will be that you will hold all of your expenses incurred in the raising of the alpacas to be used as deductions against your profit until such time as you sell the alpacas.
References: (www.alpaca101.com / www.alpacafarms.com)
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