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Depreciate farm buildingsover 20 years. Improvements to farmland, such as wetland tile, can also be depreciated. Equipment purchased for farm use can be depreciated over seven years. Furthermore, how do you calculate depreciation on farm assets?

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Of course, land is not depreciable, but when a farm is acquired, there may be items on the land that are depreciable such as fences, drainage tile, buildings, corrals, timber, wells, water lines and residual fertilizer supply.

Any amounts you spend on your conservation project that are eligible for the depreciation expense category must be depreciated and therefore cannot be included as a soil and water conservation expense. Land clearing expenses that prepare land for farming are not eligible unless it鈥檚 the conversion of grazing land to farm land.

Farmland Acquisition – Allocation of Value to Depreciable Items. When a farm is acquired, it is important from a tax standpoint to allocate value to depreciable items and set those items up on the appropriate depreciation schedule beginning with the tax year in which possession is obtained.

When talking about tax depreciation, we first have to make note that the definition of 鈥渓and improvements鈥?does not include buildings, grain storage facilities or single-purpose agricultural structures. Those assets have different depreciation rules and lives.