Advantages:

As an alpaca owner, you can either be an active investor, i.e. you are hands on with the alpacas residing on your own land, or you can be a passive investor, i.e. you can agist (board) your animals at someone else's ranch where they take care of your investment as it grows. As an active investor/breeder you can depreciate a male or female alpaca used for breeding purposes over a 5-year period. Breeding stock are considered a capitol asset. Income derived from the sale of capitol assets is usually taxed at a lower rate than that of income derived from other sources, such as regular earnings. Any expenses a breeder incurs, such as feed bills, veterinary bills, and any other costs associated with the raising of your alpacas are deductible. The active breeder has the ability to depreciate tangible property, such as barns and fences and breeding stock.

An alpaca ranch may also generate taxable losses that may be used to offset taxable income from other sources. A good way to look at your alpaca investment is as tax-deferred wealth building. A passive or active breeder can purchase several alpacas and allow the herd to grow without paying income taxes on the increased value of the herd. The passive investor who agists his animals will have different tax advantages from the active rancher, but they are still quite attractive... you'll need to hold all of your expenses incurred in the raising of your herd to be used as deductions against your profit until such time as you sell the alpacas.

We suggested that you get a copy of the IRS publication #225, The Farmers Tax Guide, for further information on taxes and livestock. A consultation with your accountant or tax advisor is advisable when considering purchasing alpacas, as with any major investment.

Potential Income:

• Sale of your own alpacas
• Breeding and stud service
• Agisting (boarding) other owners' alpacas & pertinent services
• Marketing and selling other owners' alpacas for commission
• Alpaca byproducts, fleece/fiber - softer and better than sheep fleece

Other things to consider:

Alpacas are easy to care for, sturdy animals with delightful natures

People usually purchase alpacas for either one or both of these two reasons: (1) Financial Investment, and (2) Lifestyle Investment.

The worldwide demand for alpacas and their fleece/fiber has been strong and has continued to increase yearly - the demand for these animals exceeds the supply.

As with most investments, there are potential risks, such as an injury or illness leading to death. This is limited risk. Livestock insurance policies are available, we recommend that new investors aquire this insurance until they have made back their original investment on each animal.

We recommend that the first-time buyer purchase as many bred females as their budget and marketing plan will allow. This purchase will create the optimum growth possible.

Breeding alpacas and nurturing these gracious animals can be as enjoyable as the profits they can create for the breeder. You will hear a lot of alpaca breeders say that they would rather raise alpacas than anything else they have ever done before.