bees and tax right offs

[tracy]

If I have ten or twenty hives on ten acres of vacant land that I own can I right off the property tax If I have my beekeeping setup as a business?

[ December 06, 2006, 07:14 PM: Message edited by: The Honey House ]

[shawnwri]

I'm not a tax expert, but from what I remember you could claim that portion that is allocated to the bee yard, not the full ten acres. I believe it is treated similar to a home office expense where you can only claim that portion that is specificially used for the business.

[tarheit]

That's one for the tax experts. Can a farmer write off the whole parcel of land even if only part of it can be planted (the rest being in a flood plain, utility or roadway eastments, etc.)? As a beekeeper just because the hive only occupies 2.5 square feet, how much are you allowed to count if the rest of the parcel is only used exclusivly for bee forage? (even specifically planted for the bees in my case)

As for myself, since most of the value of the property is in the house and buildings themselves (and hard to quantify without paying an appraiser); and since even with the house and buildings there aren't any rooms or areas specifically used for bees; I simply don't mess with it and I don't want to raise a red flag and try to justify it to an IRS agent later who knows nothing about bees.

Now if I ever manage to make any money and put up a honey house and bee lab, then I'll worrry about it smile.gif

You may however want to investigate how the property is being taxed. If it's used exclusively for agriculture (bees and timer stands should count), then you can get cheaper property taxes on the parcel. For parcels that also have a building on it (house, barn, etc.) it's my understanding that the portion of 'vacant' agricultural ground must be at least a certain size before the ag taxes kick in.

And don't assume you already have it unless your bill specifically states so. In many cases you have to file or request the discount. Case in point is that I just found out that in our county, any owner occupied property is elegible for a discount on property taxes. It isn't much, but you must request it, it's not automatic. (And no one I've talked to so far is aware of it).

-Tim

[ December 06, 2006, 01:43 PM: Message edited by: tarheit ]

[magnet-man]

File a schedule F. You will also be able to buy clover seeds without paying sales tax in most states.

[DANIEL QUINCE]

I believe it depends on your zoning, and you need to register a business. You probably won't need to show any income for a number of years (4 or 5) but after that the IRS will tell you to quit. My accountant does write-off my prop. taxes, but I also sell Christmas trees and hopefully I'll get some income from my vineyard in 2 years (wine and brandy).

[tracy]

I have thought about putting in Christmas trees or blueberries. Anything to help with my taxes. I have not kept bees in years but I am looking foward to starting again next spring.

[tecumseh]

tarheit sezs:
I simply don't mess with it and I don't want to raise a red flag and try to justify it to an IRS agent later who knows nothing about bees.

tecumseh replies:
sound thinking I would suggest...

[magnet-man]

number of years (4 or 5) but after that the IRS will tell you to quit.This is the hobby loss rule. There is a safe harbor that says you have 5 years to show a profit and the IRS can not claim you are a hobby business and disallow the loss deduction. You can show a loss longer but you have to have the records to show you were trying to make a profit.

It is not hard to plan a profit in any one year if you are a cash basis business for taxes.

[kensfarm]

A good CPA is worth every penny.. mine has saved me a lot of $.

[Ardilla]

I've been meeting with the county assessor to try to get my vacant land/apiary site considered dry-land farming with respect to tax status. That status will give me flat taxes of $5/year instead of a percentage of the assessed value. If cattle grazing is dry-land farming, why not beekeeping?

It doesn't hurt to lobby your local officials for such things.

[hummingberd]

tracy-

just remember that when you use a portion of your home as a tax write-off (at least here in Maine) you end up losing that money on the other end when you sell. If you never plan on moving than that wouldn't be a problem. For example, I have an in home business, and I write off 1/10 of my home, and all the expenses it incurs as an "office" when I go to sell, I'll have to pay those savings back to the government in the form of depreciation. Check with a tax attorneys!

Hope this helps smile.gif

[wayacoyote]

tax write offs? good question!

What about "farmers" insurance instead of "homeowners insurance" since you're farming the home-yard?

Or buying property with a farm loan instead of a regular home-loan?
Waya

[paulka]

Just declare them as dependents, at 50,000 thats a bigger write-off! :D

[Ronnie Elliott]

I had dinner with a lawyer friend, and he was telling me he handled the closing for a woman who bought a small track of land. She let a beekeeper from up north keep his hives over winter on the land. She claimed a agriculture exemption with the apraisal district because the bees used all the land.

[tecumseh]

ronnie..
now there is in texas a wildlife exemption, which is essentially an agricultural exemption without the cattle.

[tracy]

Thanks for all the help!!

Tracy

[Ian]

tracy, having a bee yard on a parcel of land doesnt prove the land is contributing to your farm income. Beeyards are relocatable. Build your honey extraction building and storage on that site, and you have a complete tax write off,

[randydrivesabus]

I am a CPA. I see no problem with writing off the property tax on land that you have your bees on if they are there for business purposes. Also be aware that the taxes on the land are probably not a significant amount and will not result in much tax savings. Also, if you itemize deductions then the real estate tax is deductible anyway. the only difference is if you have a profit on your business and you can reduce your profit by the real estate tax then you also reduce the SE tax, which is not reduced if you take the deduction as an itemized deduction.

[JC]

Are you trying to make a profit in your beekeeping business? I suggest an S corporation or LLC if you are a sideline or commercial beekeeper who makes a profit. I personally prefer an S corporation.

Think of a bucket. Pour water (income) into the bucket. Now take some water out of the bucket (expenses). The water left in the bucket is net income. The corporate net income (the water left in the bucket) is taxed twice if you are a C corporation. On the other hand, an S corp. is only taxed once. At the end of the year we pull the plug on the bottom of the bucket. Most of the water (income) will flow to us as dividends. There is no 15.3% self-employment tax on dividends, and there is no corporate tax on an S corporation.

[JC]

“If I have ten or twenty hives on ten acres of vacant land that I own can I right off the property tax If I have my beekeeping setup as a business?”

You do not need to “set up a business.” If your intention is to make a profit, you are a business. You would deduct your property taxes on schedule “C” on your 1040. However, the IRS will argue that you have a hobby, with nasty tax consequences. If you make a profit 3 out of 5 years, the onus is on the IRS to prove that you are not a business. If you have losses 3 out of 5 years, the responsibility is on you to prove that you are a business trying to make a profit.