tax implications of breaking 5 year lease

duffysfarm

i have looked and i cant seem to find an answer to this - lets say a farmer enters into a 5 year lease to rent out his land and satisfy s all of the conditions for tax relief under the Revenue Commissioners guidelines. After 2 years for what ever reason the tenant leaves. Does that mean the farmer now has to pay tax on the two years rental income received? anyone with any experience of this?

jaymla627

duffysfarm wrote: »

i have looked and i cant seem to find an answer to this - lets say a farmer enters into a 5 year lease to rent out his land and satisfy s all of the conditions for tax relief under the Revenue Commissioners guidelines. After 2 years for what ever reason the tenant leaves. Does that mean the farmer now has to pay tax on the two years rental income received? anyone with any experience of this?

Pretty sure your liable as conditions of lease haven’t been honoured

L1985

Could you not pass the lease on to someone else? I know our auctioneer said he could sort it as we had that concern with a tenant although it wasn't an issue in the end....even if the existing tennant subletted the tenancy?

Donald Trump

Has to be some protection on that.

Or else you could rent your ground to some bollix who tells you at the end of year 4 that he's not going to pay you in year 5 and if you want you can break the lease and take it off him and pay back all the tax saved in years 1-4


I'd say that probably, legally you could pursue them for the remaining rent if you really really wanted to

Bass Reeves

At a discussion group we were informed that you have to pay the PRSI and the USC even if you do not collect the rent. It amounts to about 10%./year.

Keep Sluicing

Bass Reeves wrote: »

At a discussion group we were informed that you have to pay the PRSI and the USC even if you do not collect the rent. It amounts to about 10%./year.

9%. I was in with the accountant today. I have to pay the tax liability in October and pre pay the this years tax liability. I've a bit of saving to do

wrangler

Bass Reeves wrote: »

At a discussion group we were informed that you have to pay the PRSI and the USC even if you do not collect the rent. It amounts to about 10%./year.

Our land lease here is subject to 4.5% tax for PRSI/USC combined so I don't know where you're getting 10%
It's bad enough

Cattlepen

From what i’m Told, if you get in another tenant to finish out the term of the lease you are grand. If you don’t then you will be liable for the amount of long term tax relief benefits.
Can you imagine it happening in year 19 of a 20 year lease?? You could be in bother then

Bass Reeves

wrangler wrote: »

Our land lease here is subject to 4.5% tax for PRSI/USC combined so I don't know where you're getting 10%
It's bad enough

it depends on your age AFAIK. The consultant talking was saying approximately 10% if under 65

Bog Man 1

If land has been leased for say 28 years is there tax problems transferring it to the next generation either by transfer or on death of the owner .

HcksawJimDuggan

Bog Man 1 wrote: »

If land has been leased for say 28 years is there tax problems transferring it to the next generation either by transfer or on death of the owner .

Yes, one of the conditions on claiming retirement relief from CGT is that the farm hasn't been leased for more than 25 years prior to transfer.

No CGT applies to land passed on death of owner so that's one way to get around it.