When I bought my primary residence it came with a small lemon grove on the same property as the house. I have been selling the lemons every year and reporting the income/loss on Schedule F. I have taken some small depreciation amounts each year for the trees, and the irrigation system.
My understanding was in the past if a home was used partly for business, you had to allocate a percentage of the home for personal use, and a percentage for business, and the business percentage part was not eligible for the $500k exclusion at all. When I read IRS 587 it appears that rule has changed over the years, and you no longer need to do that personal/business allocation. But, Publication 587 says nothing about farm use, it only mentions using a part of the home for business. Does the term 'home' include the house and land, or just the house? I'm assuming my situation falls under this business use of the home category, and I can use the full $500k exclusion, minus the depreciation. Am I interpreting this correctly?
