The end of the year is upon us, and its time to think about taxes. One perk of owning a business is tax deductions. When I owned my gas station, with every trip out of town, I would make a inventory purchase, or have a reason (for the trip) involving the business. This would make my trip a business expense, and a tax writeoff. I could then make a side stop for personal reasons too.
My wife and I sold her home on land contract with a one year balloon. The purchaser had a one year option to renew the contract. At the end of the first year, they opted to renew for a second year. After the second year they decided not to pay off the contract, and the house returned to us. There are some minor repairs that need to be done. Painting, install a ceiling fan, ect... This house is now a rental. That makes all material purchased for repairs tax deductible. Is it rented? No, and it may never be, but purchases made to upgrade the building are tax write-offs. The mortgage is a tax deduction also. How is this possible? The possibility of renting it out. We are remodeling in order to rent. I can also write-off the mileage to and from her house.
I live on 20 acres. I have a barn and 4 horses. When I first built my barn, I wanted cattle. My first wife screamed until I gave in and I purchased 2 horses for her. A gelding and a mare. What did I do with 2 horses? I started on paper, a horse breeding business. My mare was bred twice. Everything dealing with my horses is tax deductible.
Remember the IRS doesn’t require you to make a profit every year with your hobby business. Show that you are legitimately trying to turn a profit. Be sure to keep good records. I always assume the IRS is going to come calling, so I keep everything.
Starting a hobby - business, probably one of the best tax write-offs available.
