Tax Season

[mtholton]

Curious how everyone handles tax write-offs as it relates to their hunting land? I'm in the market to purchase land that would generate income from renting out the tillable portion. As such, I know certain expenses can be deducted. What are everyone's tips and trick's to make the most of their investment?

 

[bwoods11]

Property taxes, insurance, maintenance such as weed control for CRP, travel, fencing, interest on the loan if there is a loan....are just some of the write-offs.

 

[Bill]

You can depreciate equipment.
If trees fall on your fence you need a chainsaw to get them off it.
Can't spray your CRP with out a sprayer and 4wheeler to mount it to.

But make sure your accountant OK's it.

 

[mtholton]

Great responses thus far, what methods do you use to track it? I have a accountant that would monitor everything, but I'm just thinking ahead and want to be proactive with documentation etc.

 

[j-bird]

Essentially any expense you have to provide and function as a business gets included. When it's all said and done you then pay taxes on what the net profit is. Technically you have to watch equipment and the like simply because of what we do for "fun". The line between what is "farm" equipment and what is "recreational " equipment gets blurred...... so be careful.

As far as tracking stuff - I have a large mason jar that sits on the counter in the kitchen my daughter painted a few years ago with a farm scene and it says "FARM" on it. I stuff every receipt I have for the farm in there during the year. We then pull all those out to capture the odd ball stuff we buy. Just be honest with yourself about if it's for the income making portion of your life or not.

 

[Boll Weevil]

I do my own taxes and consult a tax professional when there's questions. If for no other reason, it allows a level of oversight and management into finances that I'd otherwise not have. I'm set up as an agricultural/row-cropping operation and a tree farm so nearly all (or some portion of) expenses are deductible.

My tip would be dig into and stay very close to your finances related to property ownership, relevant tax rules, and if in doubt ask a professional.

 

[swat1018]

I keep a big file folder in my truck. Every receipt that has a farm related item on it goes there. When I'm gathering my tax info I sort all of it out and total things up. I usually total up things by categories, fuel, parts, chemical/seed, equipment. (more for me than taxes)

 

[JFK52]

Hire a tax professional that understands the tax laws as they pertain to land used for agricultural purposes. The laws can change every year. It is well worth the money you spend for this service. It makes a difference if you are doing this as a hobby or a business that is trying to make money.

 

[kl9]

This topic has been discussed at length on this forum a number of times. Look at previous threads. You will only be able to offset revenues you make on your land.

 

[H20fwler]

I don't make any revenue so I don't claim any write offs.

I completely do not understand the property taxes on my farms though. I swear the county pulls their figures out of the air, purely arbitrary numbers with no formula whatsoever in their process.
I went up to the auditors office to try and find what/how their reasoning was on charging me productive tiled tillable ag ground taxes on my non-tillable ground and didn't get any satisfaction. Went from there to the Farm Bureau and then to talk with my lawyer...after a few heated emails to the auditor one of my farms was lowered to from $40 an acre to $35 the other from $111 to $40..none of it made any sense.

 

[swat1018]

I don't make any revenue so I don't claim any write offs.

I completely do not understand the property taxes on my farms though. I swear the county pulls their figures out of the air, purely arbitrary numbers with no formula whatsoever in their process.
I went up to the auditors office to try and find what/how their reasoning was on charging me productive tiled tillable ag ground taxes on my non-tillable ground and didn't get any satisfaction. Went from there to the Farm Bureau and then to talk with my lawyer...after a few heated emails to the auditor one of my farms was lowered to from $40 an acre to $35 the other from $111 to $40..none of it made any sense.

I think that is fairly common. Unfortunately, the squeaky wheel gets the grease sometimes. I've appealed property taxes before and always won, and every hearing I sat through waiting on mine went the same way.

 

[H20fwler]

I think that is fairly common. Unfortunately, the squeaky wheel gets the grease sometimes. I've appealed property taxes before and always won, and every hearing I sat through waiting on mine went the same way.

Talking with all of my friends that have working farms, all of them pay less that forty dollars an acre in my county. It completely makes no sense and one of my farms is in the WRP program the other is just a CRP border around a woods.

 

[JFK52]

Every jurisdiction has an appeal process for property taxes. I had to go before the town assessor and present my case for getting my woods reclassified to ag woods from recreational woods. It involved contacting the board of review so many days in advance by writing that you planned to appeal. Then the actual meeting was in the afternoon of a work day like Tuesday or Wednesday. All the rules are made to discourage you from appealing. When I first called the assessor, his first response was "How would you like your taxes to be even higher?" He was trying to intimidate me over the phone.
I had to wait over two hours before it was my turn at the meeting to see the assessor. I presented my facts and he reluctantly agreed with me. Bottom line was that by getting my woods to be classified as ag woods, it saved me $1K per acre per year of assessment on the woods.

 

[bueller]

Every jurisdiction has an appeal process for property taxes. I had to go before the town assessor and present my case for getting my woods reclassified to ag woods from recreational woods...............Bottom line was that by getting my woods to be classified as ag woods, it saved me $1K per acre per year of assessment on the woods.

What factors were present that gave you the ammo to argue ag woods vs rec woods?

 

[JFK52]

A state law was passed way back when Doyle was governor. The farmer who rents my land informed me about it as I had no knowledge of it. The local assessor was not going to change the designation of my woods to a lower assessed value on his own. I was actively farming my fields, either directly myself or by renting out the land to a farmer. There has to be a certain amount of acreage being farmed. Qualifying activities were defined as farming. Can't remember much more about it. I did all my homework back then. Presented my case to the assessor and he agreed with my facts.
This law is still on the books as far as I know. Looking up the pertinent statute like I did would much better explain it.

 

[yoderjac]

Curious how everyone handles tax write-offs as it relates to their hunting land? I'm in the market to purchase land that would generate income from renting out the tillable portion. As such, I know certain expenses can be deducted. What are everyone's tips and trick's to make the most of their investment?

The only way I know you can write off anything is if you have a business. We have a pine farm that generates income. We have a forest stewardship plan in place that includes managing for both timber value and wildlife. We don't deduct anything related to hunting. I one could make an argument that deer population control is a business function on a tree farm, but I think that may be pushing things and I don't want to take any chances. However, all of the equipment we use for maintaining firebreaks, putting in wildlife openings, and generally executing the forest steward ship plan are all deductible against our timber income. Our business is organized as an LLC so profits and losses are passed directly through to the owners via a K1.

Thanks,

Jack