Tax Benefits for Horse Businesses

A couple of tax benefits have been continued or reinstated with passage of the Small Business Jobs and Credit Act of 2010.

First, an owner who purchases and places in service a horse or other business property (depreciable items like tractors and other farm equipment, for instance) that he uses in a horse business in 2010 or 2011 can count the purchase up to $500,000 as a business expense.

Second, a bonus that expired at the end of 2009 is back, so that owners can take a 50% depreciation on horses and other property with an expected service period of 20 years or less purchased and placed in service during 2010. For horses, the bonus covers only animals bought new and never used for another purpose before purchase.

Consult with a tax advisor or other financial professional before deducting horse-related expenses from taxable earnings, as the laws are complex. Simply owning a horse for pleasure riding or showing does not qualify as a horse business.