Alpacas as an Investment

If you are still wondering if investing in alpacas is a wise investment… consider the following article on Feb 4, 2012 from Smart Money Today.

Alpacas as an Investment

“You may have heard that Alpacas make a great investment because of their high annual yields of fiber and the lucrative income it can provide. But did you also know that the tax code makes offers for huge benefits to Alpaca owners?

Whether you’re an individual with the ability to raise an Alpaca for fiber on a small farm or breed alpacas to shear or sell on a larger area of land, the tax code is full of deductions that will make investing in an Alpaca even more profitable than many other forms of investment.

Section 179** of the tax code allows for taxpayers to begin claiming deductions for some capital assets, the things purchased as investments toward profits, as soon as they are purchased. Alpacas are among the limited number of purchased investments that are included in this section. These are benefits that you will not be eligible to receive if you put money toward a traditional investment opportunity, like buying stock or a CD.

If you own an Alpaca for over a year, it is subject to capital gains tax, like most other investments. Capital gains are profits from an investment that has been resold. Your initial livestock will be subject to this provision if you sell them, as will any offspring from your livestock.

At the end of the day, Alpacas are a form of investment that offer significant and unique tax deductions that will start benefitting you as an investor right away. As long as you keep them, you won’t need to pay capital gains taxes, so Alpacas can be a great long-term investment opportunity. Or, if you choose to sell them, take the profit and pay the capital gains taxes on the sale, you still come out ahead—you will have accumulated enough tax benefits between the time of purchase and the sale to compensate for paying livestock capital gains taxes on your Alpacas.”

Add to all of this that alpacas are 100% insurable. Can stocks do all of this?

(Make sure that you consult a tax advisor for specifics as they relate to you.)

**February 8th, 2012 – The “Tax Relief Act of 2010″ and the “Jobs Act of 2010″ had a substantial positive impact on Section 179 for the 2012 Tax Year – below is quoted from “section179.org”:

  • 2012 Deduction Limit – $139,000
  • 2012 Limit on Capital Purchases – $560,000
  • 2012 Bonus Depreciation – extended the 50% bonus depreciation on qualified assets placed in service during 2012

© Copyright 2012 Smart Money Today All Rights Reserved

9 thoughts on “Alpacas as an Investment

  1. I have been reading all your posts for quite some time. In fact I bought your book about 6 yrs ago. Things have greatly changed since then. It takes a lot of effort to implement marketing materials and strategies when you work on a shoe string budget. With the help of a lot of books, tapes, etc. I am now able to work on this. My efforts haven’t paid off yet, but I am determined to get it right and see results. .

  2. I have alpacas, but can’t afford to advertise, get a logo or website. I also live in a poor part of AR where people are struggling and aren’t willing to take a chance on alpacas. It’s all I can do to keep them fed and wormed. I can’t afford the shows even though I have a show worthy alpaca. I am trying to hang on until times are better.

  3. just wondering if having alpacas are really worth the tax deductions? i purchased 4 last year and will see my accountant next week. i know here in michigan you cant sell them at all. their value is so low.. is the tax deductions worth it since they arn’t worth anything anymore.. love em and dont wanna sell em but like most people times are really tough to feed etc. thanks for any advice

  4. Now is the time to reach out to other alpaca breeders. We are finding ways to share on certain expenses… even going to shows and faires! Get out to the public and get the conversation going about these beautiful animals. I regularly go to farmer’s markets to sell alpaca yarn and products. When I can, I take 2 little “fiber boys” and put them in a pen next to my booth. They are the best magnet possible!

    I hope that you will continue to “hang in there” don’t give up now!
    All the best,
    Julie

  5. My advice is to get around other alpaca breeders. Find a show or open farm day near you. Locate your AOBA local affiliate and attend one of their education meetings. I know that the value of alpacas is lower than they were just 2 years ago, but that doesn’t mean that they have no value. Get creative with uses for the fiber.

    As far as the fiber, there are more ways you can sell it profitably now than when I got started in 2004. I just had a fabulous retail sales experience that far exceeded my expectations. I sold more alpaca products (many from my own animals’ fiber) in the last 4 months of the year than I had sold in the 4 years prior. In fact, I think I will write about that in a future blog.

    If people are not coming to you… then take your alpacas out to the people.
    Julie

  6. Thanks for all the valuable info you have provided for all this time. I am hoping to visit a local farm here to see some Alpacas up close and personal. Still trying to decide if this a route I want to take.

  7. We have been raising alpacas for just about 5 years, and it has been very profitable for us. When alpaca sales are down we sell fiber product, teach classes, etc. We also board a number of alpacas so there is profit there. Most of all, we love our alpacas and the lifestyle we have now. Would not trade it for anything in the world. There will always be naysayers about this business, but I believe these are the ones that most likely got into this thinking they would make a quick buck. This is a business like any other , you get out what you put in. We market ourselves constantly and educate others. If you love what you are doing that will come through. If you are willing to work at it you can make it happen too.

  8. I purchased my first Alpacas in October 2010. Over the past year I have bought a couple more, had my first cria, my first Yarn produced and have won a few ribbons at shows and sold some of my fiber pins and handknit hats. Im a single middle aged woman w/ a below 75, 000 income and was laid off June 2011. I took a chance on these animals that I have always loved and I have made great alpaca friends, am enjoying all aspects of the buissness. I haven’t made profit over cost yet but the rewards are so much more than financial. My quaility of life has increased and Im feeling so accomplished when I sell my products and show my animals. I believe we will see an increase in their $$ worth over the next five years as we continue to get the fiber industry off the ground. Dawn in NH.

  9. Julie,
    Thanks for bringing this info to our attention.
    We started with 3 neutered males 5 years ago and now have 11 animals with two new crias this year. Here in this part of New Mexico pasture is not in abundance and grass is shipped from Colorado. Two string timothy is around $14 a bale and we buy 20 bales ever 3-4 weeks. Thats the major over head but when one mom, young and first cria, didnt nurse her girl, the colostrum issue got expensive as well with gamma globulin. Expect one cria in June and lessoned learned with the colostrum issue hopefully do not come into play. We have a spinning wheel but can not spin worth a darn and that is the choke point on our production as spinners can be expensive. All the best, love them critters,
    Tom .

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