Qualifications for Farm Equipment Deduction

Farm equipment deduction is available for certain farming items. Not every item that is used for farming qualifies for equipment deduction. Farm items can be qualified based upon if it is deductible as either an expense or deprecation over life that the equipment is used.

Multiple Use Assets

A computer or vehicle that is considered multiple use assets can be partially deducted as either an expense or depreciation. A percentage of a computer's cost can be depreciated if you use the computer for farming records as well as personal use. Depending upon how much time is spent working on the computer for farming purposes determines the amount that you can deduct. For example, if use the computer 30 percent for the farm and 70 percent for personal use, then 30 percent of the computer's purchase price is able to be used as farm equipment expense.

The same rule applies if you purchase a vehicle and use it both for farming and personal use. The percentage of time the vehicle is used for farming can be deducted as a business expense. Keep track of your mileage when using your vehicle for farming to help back up your usage claim.

Farming Only Equipment

Some examples of equipment that you purchase for farming use only includes tractors, discs and rakes. These items would qualify as farming deductible expenses. There are limits that are set on the deductible amount that you can claim yearly. Note that you always have the option of depreciating the farming equipment over its useful life.

Leasing Equipment

If you lease equipment, such as a tractor to plow a field, the amount that you paid to lease the tractor would qualify for farming equipment deduction. If you pay someone to operate the tractor for you, you can also deduct the cost of the wages and any fuel used.