So how did you make your ag exemption plan?

[CraterCove]

I must confess that I have very few records at all. Breeding records, yes... but costs records or sales records? Very few if any. I have just never worried about it because the money making portion is secondary to the production of the actual animals still.

So we are trying to gain an ag exemption from the county. It's been so long since I tried to put something like this together... How did you go about it?

[rambler]

Any sales receipt I get and all my canceled checks go in the shoebox.

Three day period in Janary I pull a few all nite's and put it all together.

I don't really recommend that method, but its how I'm built.

What is a county exemption, not really familiar with that? Is this for property taxes? Or? Where I am you just are farming in a farm zone not much to prove, it is all about income tax issues here....

Paul

[CraterCove]

Yes its a property tax thing. And I am really regretting not keeping track of what I spent on animals (and sold) and medications and feed. I just added in the cash I got from animals as misc income for tax purposes and never deducted the costs.

Since we actually seem to be settling here for the long term it's time to buckle down and do things correctly.

[SLFarmMI]

I don't know if this is what you're looking for but this is what DH and I do. When we bought the property, I set up an Excell spreadsheet (one file for each calendar year). There is a sheet for each month of that year. I made columns for each general category that I could think of that we would be needing -- house, outbuildings, utilities, crops, livestock, orchard, etc. In the first column, I put the date, where it was purchased from or sold to and what it was. Then I list the amount under the relevant column. We make file folders for each quarter of the year. Any receipts/bills/check stubs are placed in the appropriate file folder. Makes it really easy during tax time.

[rambler]

Probably going to be really helpful to know what state you are in, since each state has its own different property tax rules?

Does the ag exemption drop your taxes from a residential rate to a farm use valuation, as some states around me have, or do you have a different program? I'm Minnesota it would be the 'Greenacres' program I believe?

Paul

[billinwv]

Here in WV you don't have to show profit or loss. They are only interested in production even if it is for your own use. They ask for no records. 1,000.00 per year and file by the due date. In areas where land value is great it can make a big difference.

[Belfrybat]

In Texas, as far as I know, as long as you have 10 acres or more and a set number of farm animals, the ag exemption is given. When I lived on 28 acres, I had to have at set amount of livestock -- can't remember the exact amount, but my flock of ducks, chickens and guineas met the requirements. The people that owned the land before me let a neighbour run a few head of cattle on the land several times a year to keep their exemption.

[CraterCove]

The rules seem pretty loose compared to some states here in Florida. They just want to make sure I'm not trying to cheat or anything but I am very serious about taking that step from producing just for ourselves and into the actual meat/ dairy market with the goats and with the rabbits and chickens too.

People gain the ag exemption out here for just planted pines they put on investment tracts... Or having mini horses maintain their lawns. However, I want to put a fair effort into the 'management plan' they want to see. I am doing estimated costs for building and fence improvements and low market value estimates for value of obtaining additional stock for the land.

In the end I am going to end up investing 50-75k in what I hope will one day bring in about 12-15k a year in additional, reasonably steady income. Didn't someone once say to make a small fortune in farming one must begin with a large one? But it's kind of like setting up a 'retirement' plan for me.

[rambler]

Yup, that is farming.

Remember your purchases fit into 3 categories.

Short term, seed, fertilizer, fuel, consumables that get used in a year.

Mid term, tractor, tiller, plow, stuff that you use several years, typically depreciated over a 5-7 year schedule.

And long term, building, fence, drainage or some irrigation, etc. typically that is on a 20 year depreciation schedule, you deduct 1/20th the cost each year.

This is all income tax stuff, if you are making money at it you want to take the deductions too.

Your problem will be, if you did some long term building in past years, now how do you start deducting now? Might have missed some tax savings you coulda had over the next 20 years....

Paul

[TedH71]

I'm a Texan native and my brother owned quite a few acres. He said he checked into the ag exemption and they told him he had to have livestock for 5 years running and verifiable records to back him up and he would get the ag exemption. That was in East Texas near Tyler, btw. He ended up not getting any livestock because it was too much work for him with his rare type of arthritis. He did keep feral hogs in a pen on the back part of the property though.

[CraterCove]

Thanks for the info, everyone. I sure do appreciated it.

[ET1 SS]

Here for Farm 'land-use' property status, you can submit a copy of your 1040 Schedule F.

The IRS 1040 forms are where you document all cash flow for all businesses. Schedule F is for farming.

We do a 1040 Schedule F every year. Though our land is not in the Farm land-use property status, our land is in 'Treegrowth' land-use status. [For Treegrowth, we hire a certified forester every 10 years to: review our land, give us a Treegrowth Management Plan, and to give the state a letter stating that our land is still functioning within a Treegrowth Management Plan.]

We run our pig herd free-ranging in the forest. We sell some pork and along with eggs, fiddleheads, and a few herbs. We document our farm sales with a 1040 Schedule F.

In this state, Farm land-use and Treegrowth land-use both offer about the same level of reduced property taxes. But with Treegrowth there is no minimum level of income that you must generate every year. Whereas with Farm there is a minimum amount of farming income you must generate. We pay around $1.05 per acre for our property taxes.

[rambler]

Wow.

Where I am property taxes on farmland will be around $50 an acre next year.

I'm trying to find a city tax program I could enter my land into!

Paul

[GeneMO]

Do you file a schedule F on your federal income tax? If so that oughta clench it.

Gene

[CraterCove]

You don't have to in order to gain exemption in Florida. As I find more out about it, one can only be providing for their own family and obtain the exemption... Whatever acres you use for your agricultural pursuits get the reduced taxes. So if you have five acres and use one for dry lotting pigs for your freezer that one acre gains the reduction.

I think I've got it covered.... now I just have to update the name on my SS card, get a new license and all that jazz. Blah.

[Ramblin Wreck]

Ag exemptions in Georgia vary by county, so the rules that apply in one might not apply in another. In my county, one rule is that you must own and place at least 10 acres into agricultural use (growing pine trees would qualify for instance). The next county west of me requires 20 acres to apply. I had to submit a plan of use to the county tax appraiser who then had it reviewed by some committee. It was some red tape, but it cut my property taxes by more than half.

One thing that I think is important, no matter where you are, is to be consistent with all taxing authorities (local/state/federal) and actually work towards making your operation profitable. It's quite likely your federal tax filings can act as your primary support documents if anyone questions your true status.