If you are one of the successful individuals that owns a country property with significant acreage, you could be able to score several tax breaks. Owning a large property often comes with large property taxes. However, if you are willing to operate a small farm on your property, you will qualify for several tax breaks. If you are interested in learning more about the tax breaks set aside for farmland, you will want to continue reading below.
Tax Benefits of Owning a Farm
Farmland is eligible for several tax breaks. The most common tax breaks are set aside for cattle farms, crop farms, and timber farms. In most instances, the government is willing to give farmers a tax break, because farming is becoming increasingly rare. Therefore, if you are willing to adjust your lifestyle slightly, and continue the farming practices common in your region, you will likely be eligible for a tax break.
Check Local Zoning Laws and Tax Requirements
The zoning laws and tax breaks for farms vary significantly from state to state. In some states a property may need to be of significant size to meet farming standards, whereas in other states farming may not be allowed in certain regions. If you are owning growing food for yourself and your family, you will not have to worry about zoning laws. However, once you start selling your food or attempting to obtain a special business permit you will need to abide by all zoning laws.
Tax Breaks for Owning Cattle
Some states in the United States offer tax breaks for individuals who own cattle. Normally, these tax breaks require the individual to own a farm that manages a certain number of cattle. However, even if you own cattle for your own enjoyment you won’t likely be eligible for any tax breaks. As a property owner looking for tax breaks, you will want to avoid the “hobby farm” label and prove to the IRS and your local state government that your farm is for profit.
Tax Breaks for Owning a Tree Farm
The tree farm tax benefits are generally only applied to properties where the owners practice sustainable agriculture. In other instances, a property owner may also qualify for ‘green’ tax breaks if they are willing to give up their development rights or donate their land to a conservation land trust. Certain states also provide tax breaks for properties outfitted with solar panels and other alternative energy sources.
Consult a Reputable Tax Advisor
Of course, every tax situation is different. Therefore, the various tax breaks your farm or property is eligible for will vary from the property right next door. The best way to learn about the various tax breaks you could be eligible for is to consult an experienced tax advisor. Not only will an experienced tax advisor be able to explain what tax breaks you are currently eligible for, but will also be able to anticipate and tax breaks your property could qualify for with minimal development.
Summary: Farm Tax Breaks
Owning a farm can be a rewarding experience for a variety of reasons. In addition to the intrinsic lifestyle rewards operating a farm can also be significantly rewarding during tax season. As you know now, the operation of various types of farms on your property may qualify your property for several tax breaks. Therefore, if you own a large property and are tired of the large property taxes you pay every year, you may want to consult a tax advisor about your tax break options!