Faster Depreciation for Racehorses

By NTRA
WASHINGTON, D.C. (Jan. 5, 2009) -- Starting in 2009, the equine industry benefits from a faster depreciation schedule for all young racehorses.

There is now a uniform three-year schedule under new tax law. After a racehorse’s two-year-old year, 62.5% can now be depreciated compared to only 29.85% under the previous seven-year schedule.

In the past, young racehorses were depreciated over either three or seven years, depending on when the horse was placed in service. Racehorses over the age of 24 months (from date of foaling) when placed into service were depreciated over three years; otherwise they were depreciated over seven years.

The new law allows an owner to recover his/her costs over the period of time the horse is likely to race. In a given crop of horses that make it to the track, about half will start as two-year-olds and the rest will start as three-year-olds. Most racehorses (except geldings) are off the track by age five, making a seven-year depreciation schedule anachronistic.

Yearlings are included in the new schedule.

Please consult your tax advisor for more details or visit www.SupportHorseRacing.org.