Ok-- first of all let me remind my readers that I am a farm owner and real estate agent... NOT A TAX CONSULTANT. This is not meant to be legal advice.
So, with that said... what are some of the tax benefits to owning an avocado farm? Well, you will need to file a Schedule F form with your taxes.
Then, you can be able to depreciate the irrigation, wells (if any), the trees themselves as improvements, etc. Sometimes, if you are paying a lot to the IRS from your primary source of income, you can really get quite a bit back on your tax return via the gentleman farmer route.
Your deductions can include the water, fertilizer, labor and equipment expenses you incur. Also electricity or gasoline if used in conjuction with irrigation.
Farm vehicles and equipment including tractors, trucks, Rhinos, etc can be purchased as capital expenditures.
Labor costs are deductible. If you are housing your labor force, be sure to let your tax consultant know about that, too.
Give me a call-- Jill Pettigrew, 760/468-1144