There are two ways of investing in alpacas. The active, or hands on method, where you actively raise your animals yourself for profit, and the passive, or agisted method, where you invest in the animals and someone else does the farming.
As a breeder you can depreciate a male or female alpaca used for breeding purposes over a five-year period. Breeding animals are considered a capitol asset, and as such, the first year in which alpacas are acquired, depreciation can be used to offset any source of earned income! See: Tax Relief Relief Act of 2010
Income derived from the sale of capitol assets is usually taxed at a lower rate than that of income derived from other sources, such as regular earnings. Any expenses which you incur, such as veterinary care, feed bills, or any other costs associated with the raising of your alpacas are deductible. As an active breeder there is also the ability to depreciate tangible property, such as barns and fences, as well as breeding stock to be considered! During your start-up period your alpaca farm may generate taxable losses which may be used to offset taxable income from other sources. Alpaca breeding is an excellent way to accomplish tax-deferred wealth building. The small farmer or investor can purchase several alpacas and allow the herd to grow without paying income taxes on the increased value of that herd.
If you agist your alpacas your tax advantages will vary from that of an active owner, but they will still be very attractive. The main difference will be that you will hold all of your expenses incurred in the raising of the alpacas to be used as deductions against your profit until such time as you sell the alpacas.
This is only a short, and by no means complete, summary of the tax advantages available to you as an alpaca breeder. The ,IRS Publication 225, "Farmer's Tax Guide is very helpful.
We strongly recommend that you consult an accountant or tax advisor who is familiar with breeding livestock and farming issues.
If you are one of the many people who are thinking of alpaca ownership, but cannot afford, or do not desire, to invest a large amount of money to start you may be one of the people for whom the purchase of pet quality, or fiber animals, is a good choice. It will give you a way to "try out alpacas" without a large financial commitment. You may want to agist, or board, your alpacas with an established alpaca owner for a while. This will give you a chance to find out if the raising of these wonderful animals is for you and if the lifestyle that these animals give us is one which you would enjoy. The fees are reasonable, usually only about three dollars per day and, of course, this would be a tax-deductible expense. Agisting also gives you the option of purchasing one alpaca at a time. Alpacas are herd animals and need to live with other alpacas; they can actually become very stressed if separated. That is why we strongly suggest the purchase of at least two if you are going to take them home to raise yourself. Many spinners and weavers find that the purchase of neutered male fiber animals is the answer to their desire for fiber of their very own to work with.
Some people may want to purchase one or two animals as a way to accumulate the funds required for the college education of their children. The purchase of just two breeding females is a good start toward that end. Given a ten year period those two original females can very conservatively grow into a herd of thirty or more alpacas! Of course, you may want to purchase a male to use as a herd sire, or you can take advantage of the many herdsire animals available for a stud fee. Again, if you donít wish to take on the task of breeding your own animals agistment would be an excellent option for you.
There are several ways to accomplish the purchase of alpacas. We can provide financing plans at competitive rates up to five years.
The purchase of alpacas for investment is always a personal decision and we encourage you to investigate fully the many options open to you. There is always a risk involved in the purchase of any kind of livestock and alpacas are no exception. They are however, extremely hardy and easy to raise and they are 100% insurable for mortality and theft. Actually, we donít know of a better animal to invest your money or your love in!
Copyright 1996 - 2009 ” by Foxrun Farms Alpacas All rights reserved.