Is your second home a rental property? Is the tractor needed to maintain the property? It would not be considered a business vehicle. A tractor would be added as a machinery asset and depreciated accordingly. However, only as a business deduction against the rental and if it fits the test for a business expense. If the second home is a personal residence only, the tractor is not deductible.
There are three common tests for deductibility of business expenses:
- Ordinary and Necessary - The expense must be ordinary and necessary. Generally, this means that the expense is commonly found in the specific business, and is helpful and appropriate in running the business.
- Business Purpose - Expenses must have a legitimate business purpose to be considered deductible.
- Reasonableness - The tax law requires that the deductions be reasonable to be deducted.
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