We are thinking of buying 40 acres of vacant land. It is close to the city, and the thought is that for the next few years we would leave it empty and just use it for fun (hunting, etc) and perhaps have a farmer keep some cows on it and perhaps produce some hay. So there would be some expenses related to farming and some income, but this would be low.
Then at some point we would build a house out there and move there, but maybe not even until the kids are gone to college. It is still close enough to commute to my hospital.
Do we have to create an LLC and put the title within this? My homeowner's insurance will cover it if not being farmed, and if it is being farmed, we can get a farm and home policy on it. And my umbrella insurance will provide $2 million in additional liability coverage on this property. So I'm not really worried about liability since that seems well covered. Is an LLC needed for tax reasons or any other reason? I can still take the typical deductions on the farm expenses without an LLC, correct?
Then at some point we would build a house out there and move there, but maybe not even until the kids are gone to college. It is still close enough to commute to my hospital.
Do we have to create an LLC and put the title within this? My homeowner's insurance will cover it if not being farmed, and if it is being farmed, we can get a farm and home policy on it. And my umbrella insurance will provide $2 million in additional liability coverage on this property. So I'm not really worried about liability since that seems well covered. Is an LLC needed for tax reasons or any other reason? I can still take the typical deductions on the farm expenses without an LLC, correct?
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