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.
A farming business doesn’t include:
– 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.
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.