The end of 2011 was nothing short of a “mad dash” as farmers scrambled to take advantage of the 100% “bonus depreciation” write off allowed under the 2010 Tax Relief Act.

For farmers, the last chance to take advantage of this once-in-a-lifetime tax incentive is now!

For 2012, new agricultural buildings such as pole barns, equipment sheds, hay storage, and livestock facilities are eligible for “bonus depreciation” of up to 50 percent of the cost, regardless of net farm income. This benefit is an economic stimulus measure and applies to buildings purchased after Sept. 8, 2010, and put into service before Jan. 1, 2013, with a recovery period of 20 years or less. This means BUILD NOW and take the write off!!

To qualify, the building must have a depreciable life of 20 years or less, which fits virtually all farm assets. Normally a machine shed, or shop or other general purpose farm structure is a 20-year depreciable asset, and is not eligible for a write off with the Section 179 first-year expense deduction. However, these assets do qualify for a 50% bonus depreciation if placed in service in 2012.  Virtually any building placed on a farm from livestock barns to equipment storage can be a pole building, so check this out now!

Basically, this means farmers can “write off” one-half of the entire cost of the building in the first year and recover the cost faster than ordinary depreciation allows. The deduction includes everything involved in construction, such as grading land, pouring a concrete pad, and doing electrical work.

Here’s an example: If a farm building cost $200,000 to construct and the farmer had net farm income of $100,000 for 2012. Under the bonus depreciation program $100,000 could be deducted and the farm could claim a zero net operating profit for the year! The balance of the building will be depreciated over the following 19 years. Every situation is different, so discuss this farm building write off with your tax professional before investing in a building.

Need a farm building? If you’re interested in this tax benefit, be sure to make plans to get your pole building constructed and put into use before the end of 2012, so as not to miss this soon to end opportunity.