# Tax Write Off On Horse



## Speed Racer (Oct 21, 2009)

In order to write off a horse, the animal has to be considered a depreciable asset to your business.

For example, school horses are usually insured for a certain amount, and they generate income for the owner. Once a horse is retired or dies, the owner can write off the asset on their taxes as a loss. But only on the amount that hasn't been depreciated.

That's an extremely simplified explanation, but basically how it works.

The average person can't just get a tax write off for their pleasure horse. As a hobby farmer, I don't even qualify for livestock tax exemption status. If I wanted that, I'd have to breed or otherwise use my horses to generate a percentage of my income.


----------



## kitten_Val (Apr 25, 2007)

Heck, I wish I could put my horses, cats and dogs on my tax return! (preferable as dependents because that's what they are indeed :lol: )


----------



## appystar (Mar 18, 2011)

Ok, I am still not totally sure as to what happens. The lady I got my horse from was gonna write him off on her taxes. Then my trainer told me about him and I ended up getting him. The lady I got him from has a lot of OTTB and he was one that she had for a while and didn't want or need him anymore so she was gonna write him off I guess. So if she were able to write him off then where would he go?


----------



## MacabreMikolaj (May 9, 2009)

If you are self employed as a boarding business or a trainer or coach, you have to pay taxes on your income (a regular job deducts them automatically). In these circumstances, a horse is nothing more then a product. To write something off means she is applying it as an expense against income earned so she doesn't have to pay tax on that income. For example, gifting a horse could be a tax write off because it's a charitable donation. 

It's difficult to tell if she means a genuine tax write off or if she's using it as an illegal tax write off, but it just means she's using his value against her income so she pays less taxes on it.


----------



## upnover (Jan 17, 2008)

MacabreMikolaj said:


> If you are self employed as a boarding business or a trainer or coach, you have to pay taxes on your income (a regular job deducts them automatically). In these circumstances, a horse is nothing more then a product. To write something off means she is applying it as an expense against income earned so she doesn't have to pay tax on that income. For example, gifting a horse could be a tax write off because it's a charitable donation.
> 
> It's difficult to tell if she means a genuine tax write off or if she's using it as an illegal tax write off, but it just means she's using his value against her income so she pays less taxes on it.



This. Technically as a trainer/instructor I am independently employed. I write my horses and all of their expenses/equipment off as it is considered a part of my business. While yes, this does sound like a cool idea for those who don't have this option I pay a hefty HEFTY amount in taxes and something called "pre-taxes" since I don't have a paycheck that automatically deducts it out.


----------



## appystar (Mar 18, 2011)

I am sorry I am still kinda of confused. So I am really just wondering what would of happened if I didn't buy my horse and the lady wrote him off on her taxes. What would she do with him? Would he ahve gone somewhere? I guess I keep thinking because she wanted to write him off, she would of gotten rid of him.


----------



## farmpony84 (Apr 21, 2008)

She was probably going to donate him to a school or some type of program. Then she could write him off.


----------



## appystar (Mar 18, 2011)

oh ok thanks..... one last question..... u can't get a tax write off on a horse if it goes to a kill auction or slaughter right? hope not because that would be awful!


----------



## Speed Racer (Oct 21, 2009)

Sure you can. The IRS doesn't differentiate between selling to a private individual versus a kill buyer. The asset is no longer on your books, regardless of where it went.


----------



## jdw (Mar 17, 2011)

That's right. I wouldn't worry about slaughterhouses if you live in the states; the US shut down all slaughterhouses and they have not re-opened. (Unless they were sending out of the country.)


----------



## Speed Racer (Oct 21, 2009)

Yes jdw, they're being sent out of the U.S. 

There are slaughter houses in Canada and Mexico, and U.S. horses are still being shipped there every day. 

After closing the slaughter plants here in the U.S. the horses now have a longer ride, and we have no control over how they're treated once they cross our borders.


----------



## Chow (Mar 23, 2011)

Let me try to explain it: 

Let's say you pay 10000 for a horse and then lease him out for 500.00 per month to someone that is showing him. Let's say you do this as a business and you have several others like this on your farm. You might also hire a trainer to work with these horses and the people you lease them to. Basically you are running a horse business. The price you pay for them, their feed and board, your trainers wages, all your barn expenses are all deductible against the income you take in from the people leasing your horses.
Some of your horses are a good investment and win at shows, this makes them increasingly more valuable. You end up selling some at 50,000 or more. That will increase your income. Now one of them, let's say the one you paid 10,000 for goes lame and the vet says he will never compete at the high level he was at again. You decide that you no longer want to keep investing board, training etc. Into him and no one wants to lease him if he can't show anymore. 

So you donate him to a horse rescue and if you can prove his original value, or get a certified appraisal that he was worth let's say 25,000 before he was injured, you can take that as a loss on your tax return. That is what is meant by writing the horse off on the taxes. 

Sorry so long but hopefully clear.


----------



## jdw (Mar 17, 2011)

_You wouldn't think it would be worth their time to transport, would ya? I mean look at the price of fuel for starters! However, I suppose they eat them there, and horses are still pretty cheap (at least around here). AWFUL...........anybody have any ideas how to make them open ours again?_


----------



## Speed Racer (Oct 21, 2009)

jdw said:


> _anybody have any ideas how to make them open ours again?_


People have been working on that legislation for the last few years.

As far as making money? Of course they do, or they wouldn't do it. They don't take one or two horses at a time; they wait until they have a tractor trailer load.


----------



## appystar (Mar 18, 2011)

So if I didn't buy my horse from that one lady and she did write him off chances are he could of went to slaughter and ended up in dog food or over seas on some ones dinner plate?


----------



## appystar (Mar 18, 2011)

jdw said:


> That's right. I wouldn't worry about slaughterhouses if you live in the states; the US shut down all slaughterhouses and they have not re-opened. (Unless they were sending out of the country.)


 

There are still two kill auctions here in the US though. They are held every week and if people don't rescue them then they are loaded on trucks and shipped to Canada or Mexico.


----------



## appystar (Mar 18, 2011)

Chow said:


> Let me try to explain it:
> 
> Let's say you pay 10000 for a horse and then lease him out for 500.00 per month to someone that is showing him. Let's say you do this as a business and you have several others like this on your farm. You might also hire a trainer to work with these horses and the people you lease them to. Basically you are running a horse business. The price you pay for them, their feed and board, your trainers wages, all your barn expenses are all deductible against the income you take in from the people leasing your horses.
> Some of your horses are a good investment and win at shows, this makes them increasingly more valuable. You end up selling some at 50,000 or more. That will increase your income. Now one of them, let's say the one you paid 10,000 for goes lame and the vet says he will never compete at the high level he was at again. You decide that you no longer want to keep investing board, training etc. Into him and no one wants to lease him if he can't show anymore.
> ...


 
Thanks for replying. I understand the whole donating to a college thing and getting a tax refund. For the most part I understand the whole writing off on your taxes for a horse farm. I was talking about getting rid of just a horse. I am sorry I wasn't to clear when I first posted this. I just wanted to know if she could write him off if she were to send him to a slaughter house. My horse is 4 and the place where I got him from wasn't the best. If I didn't buy him she was gonna write him off on her taxes and I was just wondering where he might go. Thanks.


----------



## MacabreMikolaj (May 9, 2009)

As I said, it's easier if you think simply in terms of self employment. As far as the IRS or Revenue Canada is concerned, income is income and taxes are taxes. It doesn't matter if your product is a living breathing creature, if it's a loss then it's a loss. So very much like someone returning a defective product that would get written off and trashed, a horse is no different in the world of finances.

If a $10,000 horse goes lame and is declared useless, she can send him to slaughter, claim the $200 she gets for him as income, and the rest is a loss or "tax write-off". However, it is STILL in her best interest to attempt to get as much as possible for him, because she's still out that $10,000 as income which really doesn't compare to the tax write off itself. All it means is she doesn't have to pay taxes on that $10,000 of lost income. 

A person continually reporting a negative income every year may not pay tax on it, but is still going to go bankrupt if they're being honest.


----------

