My main residence is on the farm acreage itself. The utilities including water, electric and propane. What percentage of utilities can I write off against the farm? If the farm is run out of the house, can you deduct a home office and would you suggest it? I heard home offices were a flag for audits. Would you use cash or accrual method and what is the difference? Can you deduct mortgage interest as farm expense? Is it more advantageous to keep the house separate from the farm? Can you write off repairs and maintenance to the house against the farm? I am not sure if the mortgage interest is secured by farm assets since the home and land are one entity. The entire farm is taxed that includes the farm house. How do you expense the taxes?
I'm assuming you are a sole proprietor farm business for these answers. If the house and farm have just one power meter, you must estimate what percentage the farm uses and deduct that amount. In most cases, I would not use the home office deduction for a farm. Most small farms use the cash accounting method. You can not deduct your personal use home mortgage as a farm expense, only the interest paid on farm land can be deducted. If they are on one loan, you must estimate the split by valuation on your real estate tax bill. Maintaining or repairing your personal use home is not a farm expense.