Raising Alpacas as a Business
Alpaca ownership can be rewarding for many who seek a quieter, in-touch with nature lifestyle. The demand for alpacas as an investment has risen steadily for more than the ten years. The limited number of alpacas available in the United States, as well as the value of the alpaca fleece support this demand. Right now, alpacas are most profitable for breeding and the sale of offspring. However, it is expected that in the future, their fleece will be profitable as the alpaca fiber industry continues to develop in the United States.

Prime factors that preserve the value of alpacas in the marketplace are selective and prudent breeding practices (the Alpaca Registry which includes a DNA sample for each alpaca and lineage); the scarcity of this unique livestock in the United States; and the fact that alpacas have only one baby per year.

Your Portfolio Needs Alpacas
When you invest in alpacas you don't need a brokerage house to hold your certificates. You can't "hug" your certificates or feed them or watch them grow. With alpacas in your portfolio, you can hug them, feed them, watch them grow in size and value, and build your portfolio with new offspring each year. This can be done by raising alpacas on your own property as an active owner, or having another farm raise them for you. This is called agisting. See below for more information.

Tax Benefits
Tax advantages are an additional benefit to ownership. Alpacas, being livestock, are depreciable and subject to capital gains treatment. The tax advantages are greater if you are a "hands on" owner in that the barn, shelters, fencing, equipment used in the business can be depreciated and expensed against income. A tax advisor can guide you through this and should be consulted before entering this business. Also see the Farmer’s Tax Guide – Publication 225. (www.irs.gov)

Alpaca breeding allows for tax-deferred wealth building. An owner can purchase several alpacas and then allow the herd to grow over time without paying income tax on its increased size and value until he or she decides to sell an animal or sell the entire herd.

To qualify for the most favorable tax treatment as a breeder, you must establish that you are in business to make a profit and you are actively involved in you business. You cannot raise alpacas as a hobby rancher or passive investor and receive the same tax benefits as an active, hands-on, for-profit breeder. A farming operation is presumed to be for-profit if it has reported a profit in three of the last five tax years, including the current year. If you fail the three years of profit test, you may still qualify as a "for-profit" enterprise if your intention is to be profitable.

Part of our service to new buyers is advice and counseling. When you invest with us we add return to your investment by being available to answer questions and giving assistance when you need it. Let us show you the benefits of "the world's best livestock investment".

Agisting
There are many owners of alpacas who do not want to personally raise their alpacas. They own them for the investment potential and tax benefits and this is called “agisting”. (See our Services page for more information.)

These passive owners do not enjoy all the tax benefits as active breeders but many of the advantages still apply. For instance, the passive alpaca owner can depreciate breeding stock and expense the direct cost of maintaining the animals. The main difference between a hands-on or active rancher and a passive owner involves the passive owner's ability to deduct losses against other income. The passive investor may only be able to deduct these losses from investment gain from the sale of animals and fleece. The active owner can write off these losses against current income.