TAX BENEFITS AND ADVANTAGES
Raising Alpacas on your own farm, in the hands-on-fashion, can offer very attractive tax advantages.
If Alpacas are actively raised for profit, all the attributable expenses can be written off against your
income. Expenses include not only feed, fertilizer, veterinarian care, travel, farm labor, marketing
accounting and attorney fees, as well as depreciation of such tangible property as breeding stock,
barns, and fences. These expenses can also help shelter current income from taxation.
Alpaca breeding allows for tax-deferred wealth building. A small farmer or investor can purchase
several Alpacas and then allow the herd to grow over time without paying income tax on its
increased size and value.
Cleve and Beverly Fredricksen of Ore Hill Farm Alpacas in Spottswood, Virginia made the decision
to change lifestyles based mostly on family reasons. Whey they first moved to Virginia, they raised
a number of different animals including Thoroughbred horses. However since 1990, when they
first discovered Alpacas, their focus has been full time on these fantastic animals, said Cleve.
Their irrestible appeal and manageable size satisfied our personal needs while the rarity of the
animals in the U.S., their blood registry, and the established worldwide market for their wonderful
fiber, made the Alpaca an ideal investment.
THE FREDERICKSENS SPENT THE FIRST SIX YEARS IN THE ALPACA BUSINESS BUILDING THEIR HERD.
IT HAS ONLY BEEN IN THE LAST YEAR THAT THEY HAVE BEGUN TO ACTIVELY MARKET THEIR
ANIMALS. THEIR TARGET MARKET IS BASICALLY REGIONAL BECAUSE IT IS IMPORTANT TO THEM
TO MAINTAIN QUALITY CONTACT WITH EVERYONE WHO BUYS THEIR ALPACAS.
There are lots of positive financial aspects to raising Alpacas, not the least of which is that it is not
necessary to pour large sums of money into expensive equipment or sizable tracts of land.
The money we invest goes directly into breeding stock, and that's a productive investment.
Additionally Cleve said, I recently went through a complete IRS audit that established that our
Alpacas are a legitimate, deductible, agricultural enterprise.
Another first timer was John and Lauren LoVerde of Fleecy Dale Farm in New Jersey.
When we first started looking at breeding females, we were blown away by the purchase price.
However, we both felt that we would be in this for the long haul; that Alpaca breeding could be a
new lifestyle and business venture. So I did a very careful-and very conservative-financial
analysis. I even incorrectly, as it turns out, factored in a fairly sharp drop in prices. Even with
my worst case scenario, my spreadsheets clearly demonstrated that we would do better breeding
Alpacas than putting the money in the stock market or other traditional investments. So we took
the plunge and bought three yearling females.
Ben and Antoinette Brewster were living in New York City and bought a farm in Virginia.
They became interested in Alpacas as an investment with appreciable tax benefits.
Antoinette's original herd of five females and two males has grown rapidly to over eighty
animals Once a real New Yorker, Alpacas changed her mind.
She tells visitors to the farm that getting into this business and making it such a big part of her
life is one of the best choices she ever made.
Says Antoinette: It never occured to me how much I would love these animals and the tranquil
and rewarding way of life they provide. I still miss the shoping and restaurants in New York City,
but Alpacas put a smile on my fact every time I look at them. When you invest in Alpacas,
you're investing in yourself.