Many people do not understand that you can use IRS CODE SECTION 179 DEDUCTION to write off your purchase of up to $125,000 worth of alpacas this year and that they can take another $125,000 deduction next year. The following example takes into consideration IRS code section 179.
Purchase price (one or more alpacas): $125,000
Section 179 tax deduction ($125,000)
Tax savings 45% (tax bracket 45%) ($56,250)
Actual after tax cost out of pocket $68,750
In other words, if you are in the 45% tax bracket (state & federal) the government will reduce your taxes by 45% of the cost of $125,000 worth of alpacas. This deduction is available for all taxpayers. To see how much this will benefit you, simply calculate your state and federal tax bracket and multiply it by the amount of your purchase up to $125,000.
An alpaca farmer/rancher with a small herd on small acreage can expect to harvest his animals' fleece and sell their offspring profitably. The value of alpaca fleece is the economic underpinning of the future market for alpacas. Breeders outside of South America are beginning to organize fiber cooperatives for the commercial processing of the fleece. Domestic fiber is often sold to cottage industries which revolve around handspinning and weaving. Most alpaca ranchers readily sell their fleece for $2 to $4 an ounce to artisans locally and nationwide. Each animal will produce three to eight pounds of fleece per year. The Alpaca Fiber Cooperative of North America (AFCNA), endorsed by the Alpaca Owners and Breeders Association (AOBA), also provides a commercial outlet for all breeders.
The current alpaca industry is based on the sale of quality breeding stock, which demands premium prices. Female alpacas begin breeding at between 14 and 18 months of age; males breed beginning at about two years. The females produce one cria (baby) per year during a reproductive life of approximately 15 years.
The factors which influence individual alpaca prices include color, country of origin, lineage, conformation, fleece quality and quantity, age, and sex. Females sell for higher prices on average than males, but herdsire quality males command the highest individual prices.
Breeders often prefer one alpaca color to another. However, the dam and sire's colors do not necessarily guarantee a cria of the same or even like color. Correct, well-conformed alpacas sell for higher prices. Fleece density, uniformity and fineness also affect the animal's price.
The range of value for females is currently between $10,000 and $40,000. Females with unique attributes have sold for more then $40,000. Young, unproven, high quality stud prospects routinely sell for between $7,500 and $25,000. Quality males, with unique characteristics or exceptional offspring on the ground, have sold in excess of $750,000. Full Accoyos, rare alpacas of very specific Peruvian origin, on average command prices almost double that of other alpacas. Many breeders start with several breeding age females and perhaps a male. Other new breeders may elect to start with several young animals or a breeding pair. There is an approach suitable for your level of interest and financial position.
Alpacas are much like diamonds. The market pays a premium for flawless examples of the breed.
