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Author Topic: NEWBIE  (Read 1035 times)

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« on: July 08, 2015, 04:37:08 PM »
Hello all, Thanks for the add.
I purchased about 60 acres in Delaware Co NY last year and joined the ATFS. We have added a doublewide and garage to the open area of our land and will continue to improve upon it as best we can. I have some questions in regards to the 480A forest tax law. I will need to buy a small tractor to maintain the trails that we have. Can we right off this expense, either partial or fully. We are not going new either, gonna find a decent used model that will suit our needs. Also what else is acceptable for the so called maintenance of the forrest? Thanks again, ...Matt
While the firelights aglow, Strange shadows from the flames will grow, Till things we've never seen will seem familiar..
Terrapin Station

Offline beenthere

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« Reply #1 on: July 08, 2015, 07:41:32 PM »
Welcome to the Forestry Forum.

If I understand correctly, the answer is "yes", but believe that you have to start out with that tax plan in mind and have everything written down in the plan. In general at least.
Best to see a tax person to get started right. You may be in good shape being the property is new.
south central Wisconsin
 It may be that my sole purpose in life is simply to serve as a warning to others

Offline Magicman

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« Reply #2 on: July 08, 2015, 08:57:44 PM »
Welcome to the Forestry Forum, AIDANMELAD.

The attorney that handled your land purchase should be able to help you if you need to form some type of corporation.  A CPA can handle your tax questions.
Knothole Sawmill, LLC     '98 Wood-Mizer LT40SuperHydraulic   WM Million BF Club Member   WM Pro Sawyer Network

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Offline clearcut

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« Reply #3 on: July 08, 2015, 09:22:14 PM »
Welcome to the Forum.

First and foremost - keep excellent written records.

I believe that the 480-a is a property tax exemption, that is a reduced assessment of the value of your managed forest land. You pay less in annual property taxes.

Writing off a legitimate business expenses reduces your Federal Income Tax liability, and possibly your state income tax liability.

See the Timber Tax website for more detailed information on Federal Timber Taxes.

In general, you should Expense any costs in the year they are generated. These are things like property taxes, small tools, annual maintenance, mileage - and a lot of others.

You should then Depreciate items that are used over many years but have a fixed life. Your tractor as an example is more likely to be Depreciated, while the fuel and oil it uses, and its maintenance would  be expensed.

For items that increase the value of the property, over the life of the property, these get added to the  cost basis of the property and are Capitalized.

A new road uses all three. Building the road bed - which is a permanent part of the property, is a Capital Expense and is added to the basis of the property. A culvert has a fixed, but long life so it is Depreciated over that life - there are tables and rules. Grading the road surface is a maintenance expense so it would be Expensed in the year the cost is incurred.

Getting a 480-a exemption goes a long way with the IRS to prove that you are in the business of growing trees. The 480-a requires a management plan and an agreement to follow that plan. For the IRS it is not necessary to have a 480-a to prove you are in the business of growing trees. The ATFS membership helps here.

You should consider developing a management plan for your property 480-a or not. A forester can help with this.

An lastly, keep excellent written records. Good luck!

Offline Jason_AliceMae Farms

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« Reply #4 on: July 10, 2015, 07:43:14 PM »
Welcome to the forum AIDANMELAD, I don't post too often but I love this forum it is a great place for information and even more important it is a fabulous group of members!

I also own property in NY and looked into the 480-a program but I decided against it after looking more into it.  The biggest turnoff to me was that the once you enter the program NYS places a lien on your property that continuously rolls over just like your participation in the program.  You sign up for 10 years  if I remember correctly and if you decide for whatever reason even after 9 years you no longer what to be part of the program you owe the taxes and some penalties.  The Lien was a HUGE turn off for me.

I am still working on a management plan and there are other ways that you can receive some property tax breaks.  I am working towards an agricultural exemption for both the hay fields that I have along with a managed wood lot for timber production.

I am sure that there are instances that the 480a makes sense and is beneficial but when I got into the details and weighing them against my goals and personal views I decided against 480a.

Best of luck with the property, I love having a piece of property that I can take care of and preserve for those that will come after me.
Watching over 90 acres of the earth with 50 acres being forest.

Someday I would like to be able to say that I left thes 90 acres healthier than when I started watching over them.

Offline coxy

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« Reply #5 on: July 12, 2015, 03:17:04 PM »
yes please read all the fine print and make shur its what you want   when your in your in     if you get out for some reason or another you can not do any thing for 9 years after you get out       and you have to ask to cut trees     your only allowed to cut 4-6 cords of wood a year (for your self  if I remember right) with out asking your forester     our hunting club got in to a pickle for cutting about 100 trees in and around old apple orchards to improve deer hunting      cant do what you want with out asking      there is good and bad with these programs      most of all try to get a good forester and he will help you and work with you for what you want     we are trying to get another forester that will work with us   good luck with your new land and welcome to the ff

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