Re Entitlements

karolmc100

I have a number of entitlements valued at €203.I want to sell these my query is what is the process for this and how much can I expect to receive. I leased them out last year

wrangler

karolmc100 wrote: »

I have a number of entitlements valued at €203.I want to sell these my query is what is the process for this and how much can I expect to receive. I leased them out last year

Plenty of auctioneers doing it out there or put them on done deal.
You can only sell 80% of them as 20% goes back to National Reserve,
So if you have 20 entitlements, you've only 16 for sale
You can transfer them online if you're selling them yourself.
Auctoneer would probably get you a better price though
The money you get is then liable for Capital Gains tax.

Bass Reeves

wrangler wrote: »

Plenty of auctioneers doing it out there or put them on done deal.
You can only sell 80% of them as 20% goes back to National Reserve,
So if you have 20 entitlements, you've only 16 for sale
You can transfer them online if you're selling them yourself.
Auctoneer would probably get you a better price though
The money you get is then liable for Capital Gains tax.

Auctioneer will charge you about 5%+vat to sell them or 6.15 euro/100 gained. I think these sell in the 1.5-2 times value. As well because the money involved is small auctioneers just tell you the price you will get for them and treat buyers the same way quoting the price that is expected and then it is take it or leave it.. You have a good share of time until they need to be sold so you could chance advertizing on DD or FJ and see what happens

Dazzler88

Is it beneficial for someone to be buying into entitlements in 2018, with the CAP changing in 2019?
Any thoughts.

wrangler

Bass Reeves wrote: »

Auctioneer will charge you about 5%+vat to sell them or 6.15 euro/100 gained. I think these sell in the 1.5-2 times value. As well because the money involved is small auctioneers just tell you the price you will get for them and treat buyers the same way quoting the price that is expected and then it is take it or leave it.. You have a good share of time until they need to be sold so you could chance advertizing on DD or FJ and see what happens

How is it treated CGT wise , as they cost nothing to buy, you'd imagine that it'd be 35% tax on the whole amount

Bass Reeves

wrangler wrote: »

How is it treated CGT wise , as they cost nothing to buy, you'd imagine that it'd be 35% tax on the whole amount

Less your CGT allowance. This is 1250 euro. Now if they are in joint names you have 2500 euro of an allowance. Standard rate id 33%

Example if OP sold his 16 entitlements ( after NR claw back) at double there value he would have 203 X 16 X2 =6496. If they are in his own name only he deducts 1250 from this leaving 5246 of a taxable gain. He would pay 1731.8 in tax. However if he sold them through an auctioneer he could dedudt there fees and any other costs from the first total. He would have 4764 from the transaction.

One thing OP if these have being only transferred to you lately by way of inheritance or if they were purchased then they have an original capital value it is only if you got them from the NR or activated them yourself in 2002 that they do not have a first day value.

karolmc100

If I came to have them as a result of the death of a spouse say in 2016 how would this affect capital value

duffysfarm

Be careful as well That you don't get caught out with vat. If you sell more than €37500 worth of entitlements then you will have to charge vat.

karolmc100

No that won't affect me

MIKEKC

wrangler wrote: »

Plenty of auctioneers doing it out there or put them on done deal.
You can only sell 80% of them as 20% goes back to National Reserve,
So if you have 20 entitlements, you've only 16 for sale
You can transfer them online if you're selling them yourself.
Auctoneer would probably get you a better price though
The money you get is then liable for Capital Gains tax.

How would the capital gain be calculated? You would have to know the original value the subtract it from the sale price. Capital gain is calculated on the gain

wrangler

MIKEKC wrote: »

How would the capital gain be calculated? You would have to know the original value the subtract it from the sale price. Capital gain is calculated on the gain

In my case I got them for nothing so it'd probably be all subject to tax apart from my annual allowance

Bass Reeves

karolmc100 wrote: »

If I came to have them as a result of the death of a spouse say in 2016 how would this affect capital value

If you inherited them in 2016 at a guess there would be no capital gain. As well you have to remember it is the value of the 20 entitlements in 2016 that is offset against the gain on the 16 entitlements

wrangler

Bass Reeves wrote: »

If you inherited them in 2016 at a guess there would be no capital gain. As well you have to remember it is the value of the 20 entitlements in 2016 that is offset against the gain on the 16 entitlements

If they were awkward enough they might see was it included for agriculture relief and selling within sixyears

Tyson Lannister

Is it worth buying entitlements now in light of the forthcoming CAP reform?

wrangler

Tyson Lannister wrote: »

Is it worth buying entitlements now in light of the forthcoming CAP reform?

That was my thoughts in the last Cap Reform too, yet any one that invested made money, especially on the lower value ones

Tyson Lannister

wrangler wrote: »

That was my thoughts in the last Cap Reform too, yet any one that invested made money, especially on the lower value ones

I have land without entitlements and am considering trying to buy some.
Not sure what to do to be honest.

Hard Knocks

wrangler wrote: »

That was my thoughts in the last Cap Reform too, yet any one that invested made money, especially on the lower value ones

The last time we knew the entitlements were going ahead, just weren’t sure of the value.
This time we’re not sure if they’re going ahead & if they are what the value will be

Siamsa Sessions

Tyson Lannister wrote: »

I have land without entitlements and am considering trying to buy some.
Not sure what to do to be honest.

We're in the same boat at home - just back farming again so have land with no entitlements. I'm inclined to agree with the following sentiments and not buy anything til there's more clarity around what's in the new CAP.

Hard Knocks wrote: »

The last time we knew the entitlements were going ahead, just weren’t sure of the value.
This time we’re not sure if they’re going ahead & if they are what the value will be

arctictree

Hard Knocks wrote: »

The last time we knew the entitlements were going ahead, just weren’t sure of the value.
This time we’re not sure if they’re going ahead & if they are what the value will be

How could entitlements not be going ahead? Do you mean that the SFP would just be dropped?

Bass Reeves

Siamsa Sessions wrote: »

We're in the same boat at home - just back farming again so have land with no entitlements. I'm inclined to agree with the following sentiments and not buy anything til there's more clarity around what's in the new CAP.

Over the years anyone that bought entitlements usually won. With the advent of the review of 2019 I still see no reason to watch for an opportunity to but such entitlements. It is unlikely that a Scotish type derogation clause will happen this time and if it dose most found that too many hoops had to be jumped through.

Between now and 2019 there may be lots of lads selling entitlements because of the fear that these will be lost to national reserve or to leasee if they do not sell. If entitlement trade at twice there value they are a no brainer. In reality if you buy at that this year then you have most of your money back by 2020. There is also the risk that the review will take longer so it may be 2021 before new rules are established.

Lads that have sat back and waited have always lost in the longterm

wrangler

Bass Reeves wrote: »

Over the years anyone that bought entitlements usually won. With the advent of the review of 2019 I still see no reason to watch for an opportunity to but such entitlements. It is unlikely that a Scotish type derogation clause will happen this time and if it dose most found that too many hoops had to be jumped through.

Between now and 2019 there may be lots of lads selling entitlements because of the fear that these will be lost to national reserve or to leasee if they do not sell. If entitlement trade at twice there value they are a no brainer. In reality if you buy at that this year then you have most of your money back by 2020. There is also the risk that the review will take longer so it may be 2021 before new rules are established.

Lads that have sat back and waited have always lost in the longterm

I'm gambling on the review taking longer as brexit has it well stalled, if I can lease mine for three years I'm ahead of selling them and hopefuly then I can give them to who i want like the last review

MIKEKC

Bass Reeves wrote: »

Over the years anyone that bought entitlements usually won. With the advent of the review of 2019 I still see no reason to watch for an opportunity to but such entitlements. It is unlikely that a Scotish type derogation clause will happen this time and if it dose most found that too many hoops had to be jumped through.

Between now and 2019 there may be lots of lads selling entitlements because of the fear that these will be lost to national reserve or to leasee if they do not sell. If entitlement trade at twice there value they are a no brainer. In reality if you buy at that this year then you have most of your money back by 2020. There is also the risk that the review will take longer so it may be 2021 before new rules are established.

Lads that have sat back and waited have always lost in the longterm

I presume you mean that people not paying tax will have most of their money back.Auctioneers fees also need to be added

Bass Reeves

MIKEKC wrote: »

I presume you mean that people not paying tax will have most of their money back.Auctioneers fees also need to be added

Too many think too much about tax. Most lads that are talking about buying are at start up stage tax is not an issue. At the end of it they are a capital investment like a tractor or a trailer but not allowable for depreciation. In theory they will be worth what most of what you paid for them in five years time. Auctioneers fees are about 6% including vat and are tax deductable. And I mean what I said in two years most lads will have what they paid for them back. If you invested the same in cattle you will not have the same return.

MIKEKC

Bass Reeves wrote: »

Too many think too much about tax. Most lads that are talking about buying are at start up stage tax is not an issue. At the end of it they are a capital investment like a tractor or a trailer but not allowable for depreciation. In theory they will be worth what most of what you paid for them in five years time. Auctioneers fees are about 6% including vat and are tax deductable. And I mean what I said in two years most lads will have what they paid for them back. If you invested the same in cattle you will not have the same return.

With only two years left in present scheme, how will we know what will happen in 5years time.while I agree that most people buying are at the start up stage, most also have off farm employment.Stock relief will help with tax but you need to be able to increase stock each year, which will require extra land

Siamsa Sessions

Bass Reeves wrote: »

Over the years anyone that bought entitlements usually won. With the advent of the review of 2019 I still see no reason to watch for an opportunity to but such entitlements. It is unlikely that a Scotish type derogation clause will happen this time and if it dose most found that too many hoops had to be jumped through.

Between now and 2019 there may be lots of lads selling entitlements because of the fear that these will be lost to national reserve or to leasee if they do not sell. If entitlement trade at twice there value they are a no brainer. In reality if you buy at that this year then you have most of your money back by 2020. There is also the risk that the review will take longer so it may be 2021 before new rules are established.

Lads that have sat back and waited have always lost in the longterm

You nearly have me convinced!

I'm guessing there'll have to be some sort of "compensation" or alternative option for people with entitlements in the new CAP, and they won't just drop off a cliff. They might be called something else, and may change over time, but it'll be a gradual process.

Does that sound reasonable? Or too optimistic?

Bass Reeves

Siamsa Sessions wrote: »

You nearly have me convinced!

I'm guessing there'll have to be some sort of "compensation" or alternative option for people with entitlements in the new CAP, and they won't just drop off a cliff. They might be called something else, and may change over time, but it'll be a gradual process.

Does that sound reasonable? Or too optimistic?

History tells us that realignment is slow and thoser that bought entitlements are always better off. In the next round I expect that Greening will be flat rated. That would rise the lowest value entitlements to over 200/Ha euro and and reduce highest vale to nearly 500/HA. But it will take 3-5 years so about 2025/26 years. If I had no entitlements I would be buying entitlements that have below average values ( sub 300/Ha) if I got them for twice there value

Siamsa Sessions

Bass Reeves wrote: »

History tells us that realignment is slow and thoser that bought entitlements are always better off. In the next round I expect that Greening will be flat rated. That would rise the lowest value entitlements to over 200/Ha euro and and reduce highest vale to nearly 500/HA. But it will take 3-5 years so about 2025/26 years. If I had no entitlements I would be buying entitlements that have below average values ( sub 300/Ha) if I got them for twice there value

I'm not committing at this point, but I'll probably start looking around for a few entitlements over the next week or two.

We'll have 7Ha on the area aid form this year, rising to 12 for April, 2019. We'll see how lamb prices (and personnel morale!) are after that before "unleasing" any more of the farm.

So, I'll be looking for 7 low-ish value entitlements if anyone knows of them going for around twice their value.

Thanks as ever for the chat on here.

wrangler

Siamsa Sessions wrote: »

I'm not committing at this point, but I'll probably start looking around for a few entitlements over the next week or two.

We'll have 7Ha on the area aid form this year, rising to 12 for April, 2019. We'll see how lamb prices (and personnel morale!) are after that before "unleasing" any more of the farm.

So, I'll be looking for 7 low-ish value entitlements if anyone knows of them going for around twice their value.

Thanks as ever for the chat on here.

Heres's a few that are in the business,

http://www.josephnaughton.ie/bps-entitlements

http://hmgentitlements.ie/

Siamsa Sessions

wrangler wrote: »

Heres's a few that are in the business,

http://www.josephnaughton.ie/bps-entitlements

http://hmgentitlements.ie/

Thanks - I'll give them a shout and ask them to keep an eye out

arctictree

I just purchased a number of entitlements this week. Can anyone advise how this transaction is recorded in the farm accounts. Is it a current expense or capital expense? Or is it an expense at all?!

wrangler

arctictree wrote: »

I just purchased a number of entitlements this week. Can anyone advise how this transaction is recorded in the farm accounts. Is it a current expense or capital expense? Or is it an expense at all?!

It's a capital expense same as land, can't be claimed against tax

Bass Reeves

wrangler wrote: »

It's a capital expense same as land, can't be claimed against tax

Auctioneers fees can be written off as an expense