Are alpacas a good investment?
Alpaca farming is not only a great investment, which is how I got my husband to agree to it, but it is also a great lifestyle. Unlike other types of livestock, alpacas offer a calmness and peacefulness to your life. They are gentle and a pleasure to observe. The crias (babies) love to run and frolic in the pasture. The adults can be just as amusing with their cute noises. No matter how you look at it, they can win over your heart real quick. However, the heart doesn't pay the bills so let's get to the financial part of it all.
When you start an alpaca farm you will be entering into new territory, even if you have owned livestock or larger animals before. Some of the tax benefits of owning alpacas are unique to the industry. One such tax advantage is the full deduction of your purchase price of your alpacas up to the capped amount, which changes each year. This means that in the tax year that you buy your alpacas you can reduce your tax liability by that full amount up to the set cap, thus you will pay less taxes to the federal government. In addition to that, you can also take other deductions as a "farm for profit". Farming for a profit means that you operate like a business with the intent to make a profit. Hobby farms do not receive the tax breaks, so if you’re in the market for alpacas and you want to receive all the benefits, then you need to treat it like a business. Now, that being said, you can also deduct things like the business use of your vehicle, home and other resources. Everything a regular business would deduct, you can now too.
Ok, so I've given you a glimpse into the tax benefits, what about the overall financial plan? Well, that depends on how much you want to make and how big you want your farm to be. Many people run a small farm in addition to their regular jobs and use the alpaca business to supplement their income as well as enjoy the tax breaks. Others may go into it with the hopes of being a large farm and one day making that their main income. The choice is yours.
When you think about the possibility of selling an animal for $5,000 to $10,000 on average, you can start to see why alpaca farming has appeal. A responsible alpaca farmer that makes good breeding choices will see a profit. And just so there's no misunderstanding, this business is not a "get rich quick" type of business. Remember that alpacas only have one cria per year so your herd will grow slowly, but if you are willing to be patient you can make money doing something you love.
Now, one more thing to consider. What can you do with all of that fiber they produce? Can you make money from that as well? Yes you can! The question "What kinds of crafts is alpaca fiber good for?" will discuss what the fiber is used for and also provide marketing ideas on how to sell it to the people who use it.
All information provided above is not comprehensive. Please check with your financial planner or tax preparer to see if alpaca farming is right for you.
Alpaca farming is not only a great investment, which is how I got my husband to agree to it, but it is also a great lifestyle. Unlike other types of livestock, alpacas offer a calmness and peacefulness to your life. They are gentle and a pleasure to observe. The crias (babies) love to run and frolic in the pasture. The adults can be just as amusing with their cute noises. No matter how you look at it, they can win over your heart real quick. However, the heart doesn't pay the bills so let's get to the financial part of it all.
When you start an alpaca farm you will be entering into new territory, even if you have owned livestock or larger animals before. Some of the tax benefits of owning alpacas are unique to the industry. One such tax advantage is the full deduction of your purchase price of your alpacas up to the capped amount, which changes each year. This means that in the tax year that you buy your alpacas you can reduce your tax liability by that full amount up to the set cap, thus you will pay less taxes to the federal government. In addition to that, you can also take other deductions as a "farm for profit". Farming for a profit means that you operate like a business with the intent to make a profit. Hobby farms do not receive the tax breaks, so if you’re in the market for alpacas and you want to receive all the benefits, then you need to treat it like a business. Now, that being said, you can also deduct things like the business use of your vehicle, home and other resources. Everything a regular business would deduct, you can now too.
Ok, so I've given you a glimpse into the tax benefits, what about the overall financial plan? Well, that depends on how much you want to make and how big you want your farm to be. Many people run a small farm in addition to their regular jobs and use the alpaca business to supplement their income as well as enjoy the tax breaks. Others may go into it with the hopes of being a large farm and one day making that their main income. The choice is yours.
When you think about the possibility of selling an animal for $5,000 to $10,000 on average, you can start to see why alpaca farming has appeal. A responsible alpaca farmer that makes good breeding choices will see a profit. And just so there's no misunderstanding, this business is not a "get rich quick" type of business. Remember that alpacas only have one cria per year so your herd will grow slowly, but if you are willing to be patient you can make money doing something you love.
Now, one more thing to consider. What can you do with all of that fiber they produce? Can you make money from that as well? Yes you can! The question "What kinds of crafts is alpaca fiber good for?" will discuss what the fiber is used for and also provide marketing ideas on how to sell it to the people who use it.
All information provided above is not comprehensive. Please check with your financial planner or tax preparer to see if alpaca farming is right for you.