Tax Advantages? An attractive advantage to raising alpacas is the very generous tax benefits. Along with potential profits from the sale of fleece and offspring, if alpacas are actively raised for profit, all the expenses of the business can be written off
against your income.
Expenses would include feed, fertilizer, veterinarian care, etc., and depreciation of tangible property such as breeding stock, barns and fences. These expenses can also help shelter current cash flow from off farm income from tax. Improvements to facilities are not only deductible expenses, but increase the real value of your property.
A small farmer or land owner can purchase several alpacas and allow the herd to grow over time without paying income tax on its increased size and value. In contrast, for an investment in a CD, interest earned during the year would be taxable. In addition, the CD could not be depreciated. Raising alpacas may also qualify your land for agricultural property tax deferral.
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