What’s It Going to Cost Me?

Financial considerations of vineyard ownership

What are the basic financial implications of vineyard ownership? I’ve tried to outline the basics here, but the information here is no substitute for the advice of a good lawyer and accountant. Before actually purchasing any vineyard property, we urge you to consult a professional. If you need the name of a good viticulturist, accountant or lawyer in the process of purchasing vineyard land, we can put you in touch with experienced people.

Developing your own vineyard – Cost to develop
Vineyard development costs are broken down into two components: First, there are the costs that all vineyards incur – they total about $30,000 an acre and include the vines themselves, the irrigation system, the stakes and trellis wire, basic land preparation, etc. Second, there are the costs that you may or may not incur based on the particulars of your vineyard. Things like power, rock removal, water storage, wells, engineering, specialized drainage or erosion control. These elements can add another $20,000 an acre to the project.

So it pays to take a good hard look at your site as your costs may be double what you get quoted as “typical” for vineyard installation. Always look at:


  1. What is the source of power and is it three phase
  2. What is the water source and is it sufficient for irrigation (16+ gallons per minute per acre) and frost protection (18+ gallons per minute per acre)
  3. Are there issues of erosion or drainage
  4. Does there appear to be a lot of rock.

Although there is no substitute for experience with these issues, common sense can lead you to the correct general conclusion 9 times out of ten.

Established vineyard – Cost to farm
Once the vineyard is up and running, it costs between $4,000 and $6,500 per acre to farm every year. Farming a vineyard is referred to as “cultural practices”. Cost vary based on quality level, aesthetics and management style. Don’t think that you’ll be able to cut your costs significantly below those listed – we’ve seen lots of people try and soon they are complaining they can’t sell their grapes and then they complain to us when they sell the property when we tell them their vineyard isn’t worth as much.

Time it takes to make your first dollar
Your first crop comes in your third or fourth year after planting depending on how much growth you get in the first 3 years. Cultural costs, less harvest, will be incurred those first 3 years even though there is no crop – you still need to water, weed, fertilize, prune and train. So make sure you add $12,000 an acre more or less to your development costs to arrive at your total capitalized cost before getting your first dollar.

You can look at Vineyard Basics and Who gets paid what and how much to get more detail about grape prices and contracts. But roughly you can expect to make about $10,000 an acre gross revenue. Minus your $5,000 an acre in cultural costs and harvest and you are left with $4,500 gross profit per acre.
The problem is that some years because of weather, disease or bad luck you may not make your $4,500 an acre. It may seem like you should be able to manage your vineyard carefully enough to avoid that, but it eventually happens to everyone. You have to be able to absorb a couple of bad years or vineyard ownership is not for you.

Taxes on a vineyard are complicated. You need a competent accountant experienced in vineyard accounting. This is especially true if you are developing a vineyard yourself. All vineyard development costs are capitalized. Unless you have a large amount of passive income to offset a passive loss, you will end up carrying forward all the costs of development as assets which will be depreciated once the income stream is established.

No matter if you developed your vineyard or not, depreciation is a valuable way to shelter the income from your vineyard. You get to depreciate everything but the dirt itself. Let say you bought a 10 acre vineyard for $1,000,000 or $100,000 per acre. You and your accountant allocated $60,000 of the $100,000 to the land and $40,000 to the improvements. You would then have a $400,000 depreciable asset.

Property Taxes and the Williamson Act
Property taxes on ag land are the same as on residential – about 1.1%. The Williamson Act was enacted as a way to encourage landowners to preserve their rural and agricultural land. As a vineyard owner you could qualify. By committing your property to the Williamson Act, you get a huge reduction in your property taxes in exchange for giving up your development rights. Talk to a competent attorney about the details if you are interested.

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