Established fact no. 1: prefabricated steel buildings are great for agricultural purposes. They offer huge amounts of open space under one roof without pillars getting in the way and they are endlessly adaptable.
Established fact no. 2: the great American public has real sympathy with the farming community because it is a tough business that has been under economic pressure for many years now.
This sympathy is all very well, but it only helps if farmers are given breaks that can help sustain their livelihood. One way in which the country is doing this is by granting tax exemptions for agricultural steel buildings. More needs to be done, but at least this is one positive – depending on exactly where your agricultural operation is situated.
Property tax is not a federal initiative, and that means tax exemptions for agricultural steel buildings vary from state to state. It is therefore impossible to generalize about this, but everyone in the agricultural industry must check out what they are entitled to – and it doesn’t necessarily depend on the size of your operation.
Some states are more caring in this respect than others. From Texas to Alabama and Minnesota to New Jersey there is relief available.
Call an Accountant For Local Information
As in any industry, within the agricultural community there are people who are red hot on the economic side of it and others who think solely of the work 99% of the time, while financial opportunities pass them by.
Perhaps one obstacle the agriculture industry needs to overcome is the thought that saving money on tax is illegal. It is not. Tax evasion is illegal, but that is another matter entirely. State governments offer these breaks to help people, and they’re there to help those who need it.
The fact is that, in some locations, if you spend, say, $100,000 on an agricultural steel building, you could save big-time in the longer term. Not only does a superb new facility such as this improve your efficiency and performance, but you can offset part or perhaps all of the cost simply by claiming what is rightfully yours.
How Depreciation Can Be a Good Thing
A common definition of depreciation is the reducing of the price or value of an asset. On the face of it this would be a bad thing rather than a positive one, but that all depends on what your intentions are for this asset.
Let’s say the item in question is an agricultural steel building, such as a barn. For tax purposes such a building loses market value year upon year. But the value is only relevant to the owner if they are intending to sell it. If you have a prefabricated steel building that is, by its very nature, going to do a great job for you for decades, who cares what the nominal value is reduced to over time?
This is an additional benefit to the general picture of tax exemptions, but the difference is that depreciation covers all manner of enterprises, not just agricultural businesses.
The Basic Facts: Do You Qualify for Agricultural Tax Exemption?
The whole idea of agricultural tax exemptions, including those applying to agricultural steel buildings, is to help farmers in these difficult economic times.
That means you’re not going to get a tax exemption for your beautiful new prefabricated steel building if you raise a few cattle, keep a bunch of chickens and grow vegetables for your family and to make a few dollars selling them to the public, while this is not your primary occupation.
Even if you do qualify as a farmer, you can only get tax exemption on the buildings you use for genuine agricultural purposes. Parcels of land and the buildings on them will typically not qualify for this benefit if they are used for, say, equestrian activities or outdoor activities such as shooting.
As much as these things may fall under the general banner of agricultural matters, they are essentially add-ons used to boost income, and while the government wants to help you with your core business, they have tight rules on what qualifies and what doesn’t.
That is not to say you can’t apply for other tax breaks involving commercial buildings, but agricultural means agricultural. As suggested earlier, you should talk to an accountant about this – unless you have the time and the inclination to talk to the IRS.
Beware trying to bend the rules here by adding desirable but unnecessary luxuries to agricultural buildings. You could find that your perfectly legitimate and eligible steel barn is turned down for tax exemption if there are animals or wall-to-wall root vegetables on the ground floor but a spa facility or a dance school upstairs.
It All Depends Where You Live
Just to emphasize the point, property tax is not a federal matter. It is dictated by local authorities and may well be influenced by the history of the area and the state in general. If your area has a tradition of agriculture, the powers-that-be may be keen to reflect that history and maintain the image of the state as an agricultural center that contributes to the welfare of the country.
Alternatively, if there is no real history of farming in your area, someone with influence may wish to change that by bringing an element of growing produce and raising livestock into the mix. The world at large is tired of relentless industrialization at the expense of the time-honored American way of providing for the community.
If you are considering a prefabricated steel building, why not see if you can reduce the cost by way of a tax exemption?
