Renting / Leasing out Land

mp3ireland2

Hi,
My Dad is a semi retired farmer and thinking on leasing or renting out some land. Neither of us know much about it and he was wondering if anybody knew....

Is it better for
(a) tax purposes to lease or rent out land?
(b) grant entitlement purposes to lease or rent out land?

Does renting/leasing land impact grant entitlements?

Apologies in advance if the question is far too generic and it all comes down to specifics and no generally applicable answer can be given!

epfff

mp3ireland2 wrote: »

Hi,
My Dad is a semi retired farmer and thinking on leasing or renting out some land. Neither of us know much about it and he was wondering if anybody knew....

Is it better for
(a) tax purposes to lease or rent out land?
(b) grant entitlement purposes to lease or rent out land?

Does renting/leasing land impact grant entitlements?

Apologies in advance if the question is far too generic and it all comes down to specifics and no generally applicable answer can be given!

Thats a big question.
But short answer is long term lease (5 years plus depending on value) is most tax efficient
Any grant must be drawn down by an active farmer so if land is rented/leased you are not an active farmer.

You need professional advice for accountant inrelation to tax efficency.

A good ag adviser with a Stupid tennant may be able to help you bend the rules to draw grants

I dont think anyone knows anything about future of grants because of so many variables in eu budget

mp3ireland2

epfff wrote: »

Thats a big question.
But short answer is long term lease (5 years plus depending on value) is most tax efficient
Any grant must be drawn down by an active farmer so if land is rented/leased you are not an active farmer.

You need professional advice for accountant inrelation to tax efficency.

A good ag adviser with a Stupid tennant may be able to help you bend the rules to draw grants

I dont think anyone knows anything about future of grants because of so many variables in eu budget

Great thanks for your help, knew it was a big question with lots of specifics required but good to get a general feel for it, yeah he has mentioned it to the accountant but think just trying to figure out if he will lease the land or not.

Panch18

mp3ireland2 wrote: »

Great thanks for your help, knew it was a big question with lots of specifics required but good to get a general feel for it, yeah he has mentioned it to the accountant but think just trying to figure out if he will lease the land or not.

in the vast majority of cases its a no-brainer to lease it out. Even just check out the IFA website for some basic info

taken from there is the income tax exemptions:

With effect from 1 January 2015 the age restriction and the requirement to be permanently incapacitated were removed, the amount of income that may be exempted under a qualifying long term lease was increased and a fourth threshold introduced for lease periods of 15 or more years with income of up to €40,000 being exempted.

€40,000 where all the qualifying leases are for 15 years or more,
€30,000 where all the qualifying leases are for 10 but less than 15 years,
€22,500 where all the qualifying leases are for 7 but less than 10 years, and
€18,000 where all the qualifying leases are for 5 or 6 years.

mp3ireland2

Panch18 wrote: »

in the vast majority of cases its a no-brainer to lease it out. Even just check out the IFA website for some basic info

taken from there is the income tax exemptions:

With effect from 1 January 2015 the age restriction and the requirement to be permanently incapacitated were removed, the amount of income that may be exempted under a qualifying long term lease was increased and a fourth threshold introduced for lease periods of 15 or more years with income of up to €40,000 being exempted.

€40,000 where all the qualifying leases are for 15 years or more,
€30,000 where all the qualifying leases are for 10 but less than 15 years,
€22,500 where all the qualifying leases are for 7 but less than 10 years, and
€18,000 where all the qualifying leases are for 5 or 6 years.

Great thanks for that, I plan to log into his computer via teamviewer and open up a few sites for him (he's not too computer literate.....the internet=donedeal for him ) let him read into it then but good to have initial idea, as I'm not into farming myself and currently living abroad.

Donald Trump

mp3ireland2 wrote: »

Great thanks for that, I plan to log into his computer via teamviewer and open up a few sites for him (he's not too computer literate.....the internet=donedeal for him ) let him read into it then but good to have initial idea, as I'm not into farming myself and currently living abroad.

If he's not too computer literate you might want to be warning him about the oul' scams in case our buddies in India give him a call about viruses in his computer and are delighted to find out he already has teamviewer installed!




Does anyone know how they calculate it if entitlements are rented with the land? Can you get that money tax free as well? If you were renting out the land surely you'd want to have those separated out?




I'm asking about the latter because I know of a few oul' fellas who "sell the grass" off their fields. You know yourself. If they could wrap their entitlements up into the tax-free amount they'd be far better off doing things properly!

893bet

Panch18 wrote: »

in the vast majority of cases its a no-brainer to lease it out. Even just check out the IFA website for some basic info

taken from there is the income tax exemptions:

With effect from 1 January 2015 the age restriction and the requirement to be permanently incapacitated were removed, the amount of income that may be exempted under a qualifying long term lease was increased and a fourth threshold introduced for lease periods of 15 or more years with income of up to €40,000 being exempted.

€40,000 where all the qualifying leases are for 15 years or more,
€30,000 where all the qualifying leases are for 10 but less than 15 years,
€22,500 where all the qualifying leases are for 7 but less than 10 years, and
€18,000 where all the qualifying leases are for 5 or 6 years.

That is per annum tax free income?

Tis hard to see why anyone is farming!

Donald Trump

893bet wrote: »

That is per annum tax free income?

Tis hard to see why anyone is farming!

Yeah....but think about the acreage you're setting out to hit those limits. You'd probably find better returns for your investment than handing over 1m on a farm and setting it out for 18k tax free for the next 5 years.




I see there as well where they are hinting they will try to start seizing farm land close to towns and villages. You would imagine there's a chance that such a scheme would fail...but you never know. It will just make developers happy.


But with those kinds of worries, not to mention Brexit plus corona, you wouldn't even be able to be overly confident your capital would keep its value!

wrangler

Donald Trump wrote: »

If he's not too computer literate you might want to be warning him about the oul' scams in case our buddies in India give him a call about viruses in his computer and are delighted to find out he already has teamviewer installed!




Does anyone know how they calculate it if entitlements are rented with the land? Can you get that money tax free as well? If you were renting out the land surely you'd want to have those separated out?




I'm asking about the latter because I know of a few oul' fellas who "sell the grass" off their fields. You know yourself. If they could wrap their entitlements up into the tax-free amount they'd be far better off doing things properly!

The lease of the entitlements is tax free if it's leased with the land. if they're leased out separately they're taxed in the normal way.
It's likely that landlords won't be allowed have entitlements in the next CAP reform only active farmers so your friends might be better stay as they are until after that's sorted