Buy entitlements or not ?

techtom

Our home farm is missing some entitlements for its size. We also bought a farm some time back in all we are missing entitlements 

We are farming all units since 2011. And SPS reflects that.

Our entitlement value will be low in 2015.

Are we better off buying entitlements before may 15th 2013. To have a higher value going into 2015 ?

Or waiting for national average to raise our entitlement value ?

case885

your better off not with cap reform you will probably benefit if your sfp is low per hectare.

coolshannagh28

You could buy high value entitlements and allow the system to depreciate them down to the national average.

Farm King

What year will the new system come in. If I were to buy entitlements this year, I will get paid on them in 2013 but will I get paid on them in 2014?

Conmaicne Mara

Won't it mostly depend on how long the period of change is? Which could be up to 2019. It certainly won't happen over night, but neither are the details finalised.

Farm King

Conmaicne Mara wrote: »

Won't it mostly depend on how long the period of change is? Which could be up to 2019. It certainly won't happen over night, but neither are the details finalised.

Yes - but if 2012 is the reference year I presume I would only get paid on it in 2013?

fiatagri8090

Am in a similiar situation myself as 40% of farm is without entitlements. Was considering buying as well. Would high value or low value entitlements be the best option? And would i reap the reward on these extra entitlements post 2014?

Username John

fiatagri8090 wrote: »

Am in a similiar situation myself as 40% of farm is without entitlements. Was considering buying as well. Would high value or low value entitlements be the best option? And would i reap the reward on these extra entitlements post 2014?

The way I see it - if you buy entitlements for as close to their face value as possible, you shouldn't lose.

You know you will get paid on the entitlements for 2013 - this should mostly cover the cost of buying them.
Its very likely you will be paid again in 2014 (as the new system wont be up and running by then)
So you are up...

But your question of "would i reap the reward on these extra entitlements post 2014?" - I don't think anyone can really answer that...
Well - I certainly cant anyways

eorna

if it was me i'd buy low ish for face ish value or 1.2 their value....i wouldn't gamble in high value entitlements at 2 times the price..you could get badly caught with new system but nobody really knows...now thats how i see it..

newholland mad

Username John wrote: »

The way I see it - if you buy entitlements for as close to their face value as possible, you shouldn't lose.

You know you will get paid on the entitlements for 2013 - this should mostly cover the cost of buying them.
Its very likely you will be paid again in 2014 (as the new system wont be up and running by then)
So you are up...

But your question of "would i reap the reward on these extra entitlements post 2014?" - I don't think anyone can really answer that...
Well - I certainly cant anyways

Rember when you get paid on those entitlements in 13 and 14 you pay tax and all the add ons at your marginal rate BUT the cost of buying these is not reclamable as an expence so the payback could take 2 years for face value entitlements.

Vedel

I have 10 acres that were rented over the passed 9/10 years and now the tenant no longer wants them . What must I do to claim entitlements? I have other acres under forestry and get the non farmers grant . How do I now become a farmer and claim entitlements .

bmcdona

I'm in a similar situation, except I don't have any sfp... I only get disadvantaged area and reps.

I started farming in 2005 as a young farmer on land which had no entitlements. I didn't get anything from the national reserve as off farm income was just above the threshold.

What do ye think.. Should I buy some entitlements or should I get something in the cap reform? I farm 30 acres and was thinking of buying some low value entitlements just for the sake of having something, but am hoping that because I've been farming since 2005 without any sfp i should benefit someway. I'll miss out on any advantages for young farmers this time around...

Green farmer

Any updates what people are doing now that minister has made final decision ? I was quoted 2.4 times faces value recently for buying them as I have a few hectares without entitlements

coolshannagh28

There s not much trade yet but there are a few high value ones around which might indicate men trying to avoid big cuts particularly if they traded and are not subject to capital gains. There may be value yet as the 10% cut takes the steam out of the trade in general ,study the multiples and be aware of your tax situation

keep going

My reading of the situation is that you must pay for entitlements out after tax income and then if you are in 40 %tax you will be paying tax on their income.are they worth buying at all if you are in the high tax bracket