You are now among the many investors who’ve invested in Florida farms for sale. You get to enjoy the benefits that come along with owning your land. You have the opportunity to generate income and increase in value, but you must have a well-researched financial plan to do so. We’ll highlight a few important areas you should know about when investing in farmland.
Before using your farmland investment for agricultural farming, check with your local zoning department. Conflicts with zoning restrictions and conservation easements can restrict the use of your property. If you plan on having livestock, you should check in with the local health department. Different zoning laws determine the type and number of livestock you are allowed to have on your property. For example, you will have to check zoning laws in your county before adding enhancements like a residential home or a well to your property.
Income Tax Breaks
Owning agricultural land comes with tax benefits. Always keep accurate records of your income and know what deductions, tax credits, and exemptions you can take. If you can show that you have made a profit in three out of five years, the Internal Revenue Service (IRS) considers your farmland a business. You can deduct employee wages, purchased livestock, and fuel used for work done on the farm, to name a few. If you do not make a profit in three out of five years, the “hobby loss rule” will apply.
Property Tax Breaks
Investing in farms for sale in Florida earns you property tax relief. Property tax relief encourages development, property improvement, and decreases the taxes of certain properties. It also helps to keep farmland property affordable. Relief varies state by state so it’s important to contact a tax assessor or the Florida Department of Agriculture and Consumer Services to determine which tax breaks apply to you. Also, contact the property appraiser’s office to see if your property qualifies for agricultural classification also known as “greenbelt”.
*This information is for educational purposes only. It is not intended to take the place of qualified advice from a tax professional or IRS representative. Deductions and tax write-off rules and regulations for farmland owners are constantly changing. If you have any IRS questions or want to stay up to date with deduction rules, please contact the IRS for assistance.