Land Tax Write Off?

firecatf7333 · Feb 4, 2014

I will ask my accountant but right now he's busy.

I'm buying land to build and house on and will farm corn/beans on it. Can the land purchase price be depreciated and used as a write off towards any income the cash crop brings in? Thanks

smstonypoint · Feb 4, 2014

No.

Steve

bigbull338 · Feb 4, 2014

as said no.but you can get farm use on the land that way your proptery taxes wont be as high.

mark02tj · Feb 4, 2014

You can't "depreciate" the land, however if you are using it for income production, you can deduct "ordinary and necessary" expenses related to it. In other words, your real estate taxes for the land you're using to produce income can be deducted against the income generated. If you're just getting a single tax bill that applies to both the property that the house is on as well as the land itself, you (or your accountant) are going to have to come up with an allocation formula to determine the applicable tax for the income producing land. The remaining amount can be used as an itemized deduction on your personal return.

If you build any structures (ie-pole barn to store equipment in) on the property that are related to the income production, you should be able to depreciate those.

I don't know about NY, but in OH any purchases that you make that are related to agricultural activities can be made without having to pay sales tax. So, once your tractor becomes a "farm tractor" (assuming you use it in conjunction with the corn/bean farming) any repair parts, etc. can be made without sales tax.

Your best bet is to find a CPA in your area that specializes in doing taxes for farmers. Ask your neighbors who they use and interview that person. But, do the CPA a favor and wait until after April 15 to interview them!! It's kind of a busy time of year for them right now!

MoKelly · Feb 4, 2014

Reminds me of a story the Farmer who leases some of our river bottom land told me afew years ago. We were talking about the work v. monetary reward of farming. I mentioned that at least he could write-off his tractor costs.

He said as seriously as possible --- "you can only deduct gambling losses to the extent of gambling winnings".

OK. It took me a while to get it as well.:laughing:

MoKelly

nybirdman · Feb 4, 2014

If you set up a business:you can deduct part of your taxes(you may have to separate your house) and depreciate any equipment and deduct operating cost(fuel ect.) .