what does it take to get tax deduction for farm land , cows or horses?

Question

some body told me if you put a cow or horse on your property you get a tax break , having a house built on four acres out in the boonies rural area

Answer 1

One thing that Rann didn't mention is that if you file a farm tax return & keep showing a loss it can trigger a "red flag" for the IRS. There is a lot of abuse in this area, therefore, it is one thing the IRS looks at rather closely. You have to show that you are in it with a profit motive. To continually show a loss indicates that it is more of a hobby than an actual business with profit motive. If it is viewed as a hobby, you cannot take a deduction for the loss. The IRS will also look at what your main income source is also. If you are say, an attorney, and you have a farm "loss" it will definitely be viewed as a hobby since your main source of income is something other than farming.
I would be very cautious in taking any kind of deduction for a "farm". The people out there doing so will probably regret it later. If they are examined by the IRS they would have to pick any losses taken in prior years as income and not only pay the tax on this income but will also have to pay penalties and interest.

Answer 2

People will tell you all sorts of things.

Reasonable and necessary expenses incurred in the operation of a business are tax deductible. However, putting a cow or horse on your property does not make it a business; there has to be a reasonable expectation of profit.

Answer 3

What it takes is an actual profit motive for your "farm". Just putting a horse on your 4 acres does not make it a farm. As usual in "some body told me" scenarios, "some body" is incorrect.

Answer 4

If you can file as a farm and operate at a loss, that'd be about the only tax break that I know of.

Answer 5

You will save the sales tax since you won't have to buy as much fertilizer.

Answer 6

you can't deduct your dog or cat either.