Primary Producing Investment - Agricultural Land

[qonyx]

Hello Everyone,

I had an interesting conversation with a colleague at work today who shared some details about a 130 acre property in NSW that he initially bought as a hobby/recreational farm but then discovered that he was able to flip this into a primary production farm that housed ~30 head of beef cattle.

He mentioned that he was able to get some great tax benefits and at the same time was able to use it as a recreational/hobby farm.

This piqued my interest as it could potentially be strategy to achieve to have exposure to capital gains and financially benefit those that are in the higher tax brackets and at the same time act as a bit of a hobby/recreational farm.

I'm wondering if any of you have ventured down this path and able to share some of your experiences on this and whether the thought of this is really just romanticism.

He purchased up near Newcastle for 400k and says it is worth about 600k....

Interested in your thoughts on this.....

Regards,
q

 

[Terry_w]

Would love to buy a large acreage and do this, but no experience yet.

He probably has primary producer concession for land tax and he may be able to average his income over a few years. there are also some stamp duty concessions too.

 

[jrc]

http://law.ato.gov.au/atolaw/view.htm?DocID=TXR/TR9711/NAT/ATO/00001

http://www.smh.com.au/small-busines...sses-against-other-income-20130819-2s5yv.html


https://www.ato.gov.au/Business/Pri...y-producers-and-professional-arts-businesses/

A fair bit of effort to go to if you expect to make losses. On a small farm maybe you might be in front by running a few cattle to keep down the weeds etc some owned by your spouse and some by you and selling some each year. As long as you each sold less than $20,000 worth you might not have to worry about tax and showing you are operating a primary production business. By the time you paid interest, rates, vet, fencing etc you might break even.