Recently my husband and I purchased some acreage with a modest home on it and nothing else. We were heavily motivated by the thought of earning sweat equity and the fact that a good friend was willing to sell it to us at a great price. I had been dreaming about finding enough property for a small homestead and was thrilled by the opportunity and good fortune that had graced us.
As a country girl born and raised, I was eager to shape our bare land into a bustling farm but my husband was the voice of reason. We started small with the purchase of 10 baby chicks and continue to dream/plan for the future. As I sat mesmerized by endless YouTube videos of various homesteads, the accountant in me began to muse about the possibility of turning our little homestead into a real, live, tax deductible, maybe even quit my job someday, farm. Of course my first stop was the IRS website to begin my research.
According to the IRS:
A farming business is the trade or business of cultivating land or raising or harvesting any agricultural or horticultural commodity.
- Operating a nursery or sod farm;
- Raising or harvesting of trees bearing fruits, nuts, or other crops;
- Raising ornamental trees (but not evergreen trees that are more than 6 years old when severed from the roots);
- Raising, shearing, feeding, caring for, training, and managing animals; and
- Leasing land to a tenant engaged in a farming business, but only if the lease payments are (a) based on a share of the tenant’s production (not a fixed amount), and (b) determined under a written agreement entered into before the tenant begins significant activities on the land.
A farming business doesn’t include:
- Contract harvesting of an agricultural or horticultural commodity grown or raised by someone else, or
- Merely buying or reselling plants or animals grown or raised by someone else.
– source: https://www.irs.gov/pub/irs-pdf/i1040sj.pdf
The more I read, the more excited I became. This was possible! I immediately went back to my receipts and Quicken software to re-categorize and tag my purchases of chickens and related supplies.
- Trough, heat lamp, chick starter, and shavings – write off
- Wire cage purchased for a chicken run – write off
- Wood, paint, flooring, and other various building supplies for the coop we built – you guessed it – write off
It was a small step towards the goal of a farm business, but it energized and excited me to realize that our future homestead could be more than a source of food for our family. It could actually become a part of our retirement income.