Horses - business or past-time

[simplyjoe]

I have a friend who owns 5 horses. Two of these he uses for showjumping. His wife owns a horse which she brings and shows at agri shows etc. His daughter owns a horse which she rides. Sometimes he sells horses. As the profit he makes from these horse sales can be significant at what point do the sales become taxable and cease to be a by-product of his hobby. He maintains that it is still a hobby even though he could have made €20k from sales last year.Likewise with the sale of motor cars. I have a friend who buys old cars, does them up, holds them for a while and then may sell them. When does the hobby stop and when does the trade start?

 

[Towger]

As the profit he makes from these horse sales can be significant at what point do the sales become taxable and cease to be a by-product of his hobby. When does the hobby stop and when does the trade start?

No difference to Revenue. They must be added to any other earnings and taxed at the appropriate rate eg 41%. The first 1,270 (Capital Gaines Allowance) may be tax free.?

 

[Joe1234]

I have a friend who buys old cars, does them up, holds them for a while and then may sell them.

That is a trade. He is trading in cars, and doing it to make money.

 

[lorna]

are you asking these questions on his behalf, ie, i assume he knows you are making these enquiries or are you maybe a bit green in case he makes a bit of cash on the side for himself ! suggest you leave him to sort his own tax affairs ! - his business !

 

[Glenbhoy]

See here:
http://www.askaboutmoney.com/showthread.php?t=41266&highlight=wasting+chattel

To me it would appear that these gains are probably not taxable, all depends on the revenue, if they see it as a trade, he'll be taxed as normal.

 

[monkeyboy]

No difference to Revenue. They must be added to any other earnings and taxed at the appropriate rate eg 41%. The first 1,270 (Capital Gaines Allowance) may be tax free.?

If it does not fall under an exemption I think you may find that when all the expenses are added up in a year stabling, new horses, transport to competitons, feed, vet fees, land rent etc etc etc. that this guys "business" is trading at a loss any way.

20k does not sound like it would cover much for this sort of hobby. Even top race horses are often not profitable-hence the sport of kings!

 

[simplyjoe]

are you asking these questions on his behalf, ie, i assume he knows you are making these enquiries or are you maybe a bit green in case he makes a bit of cash on the side for himself ! suggest you leave him to sort his own tax affairs ! - his business !

Helping a friend. This is what you do for friends. We have discussed it. If he has a liability he should pay the tax. If he hasn't great. You seem to have a suspicious mind.