Buying land

simx · 20-09-2019 12:09pm #1

Hi lads just wanted to put this out and see what opinions are out there

Currently renting land for replacement heifers

No mortgage, no massive debts

There’s land a couple miles away from me for sale-severely neglected land, was rented for years and abused, some of the land is good but I’d say you’d turn it all to farmable once minded etc, also no water

Was thinking 5-5500/ac and a further 1500/ac spent on it to make it anyway viable, would take a few years before it would be getting to good production, Index 1 type land

Alternatively if I bought 12-14ac even if it was 12-15 miles away of top land and gave 10k/ac you’d have a better bet long term and should the need arise(if bounding land came up) could be sold again easier you’d imagine

Thanks in advance

Grueller · 20-09-2019 12:31pm

simx wrote: »

Hi lads just wanted to put this out and see what opinions are out there

Currently renting land for replacement heifers

No mortgage, no massive debts

There’s land a couple miles away from me for sale-severely neglected land, was rented for years and abused, some of the land is good but I’d say you’d turn it all to farmable once minded etc, also no water

Was thinking 5-5500/ac and a further 1500/ac spent on it to make it anyway viable, would take a few years before it would be getting to good production, Index 1 type land

Alternatively if I bought 12-14ac even if it was 12-15 miles away of top land and gave 10k/ac you’d have a better bet long term and should the need arise(if bounding land came up) could be sold again easier you’d imagine

Thanks in advance

Don't underestimate the time lost with an outside block. I have one 8 miles away and I have to cross a busy town to it. I would give sell it in a heart beat if a piece came to the market close to me.

simx · 20-09-2019 1:33pm

Grueller wrote: »

Don't underestimate the time lost with an outside block. I have one 8 miles away and I have to cross a busy town to it. I would give sell it in a heart beat if a piece came to the market close to me.

That’s true, it would be something to have if something did come up nearer in future also, might aswell be paying off something as paying for rent

kk.man · 20-09-2019 3:14pm

simx wrote: »

Hi lads just wanted to put this out and see what opinions are out there

Currently renting land for replacement heifers

No mortgage, no massive debts

There’s land a couple miles away from me for sale-severely neglected land, was rented for years and abused, some of the land is good but I’d say you’d turn it all to farmable once minded etc, also no water

Was thinking 5-5500/ac and a further 1500/ac spent on it to make it anyway viable, would take a few years before it would be getting to good production, Index 1 type land

Alternatively if I bought 12-14ac even if it was 12-15 miles away of top land and gave 10k/ac you’d have a better bet long term and should the need arise(if bounding land came up) could be sold again easier you’d imagine

Thanks in advance

I'd give anything to get land at 5 to 5.5k anywhere near me!

freedominacup · 20-09-2019 3:22pm

kk.man wrote: »

I'd give anything to get land at 5 to 5.5k anywhere near me!

Ah no you wouldn't. You'd give 5 to 5.5k an acre for it or else what's the point? ðŸ€”ðŸ€”

Grueller · 20-09-2019 5:28pm

simx wrote: »

That’s true, it would be something to have if something did come up nearer in future also, might aswell be paying off something as paying for rent

Absolutely agree. That's why I bought that place. It might break the back of a bit nearer if it ever came up.

lalababa · 20-09-2019 5:56pm

Up to 8k an acre , how many years with replacement heifers + labour to start making money? Can you give a break down?

forgottenhills · 20-09-2019 6:58pm

simx wrote: »

That’s true, it would be something to have if something did come up nearer in future also, might aswell be paying off something as paying for rent

You might be better off waiting to see how Brexit works out first. Land might be cheaper next year. Its not as if that piece of land is convenient to you either.

simx · 20-09-2019 8:48pm

lalababa wrote: »

Up to 8k an acre , how many years with replacement heifers + labour to start making money? Can you give a break down?

It be more a case of an investment I suppose, I would rear replacements, if I were to break down pay back time for a lot of farm investments + labour I’d be one sad boy

Mooooo · 20-09-2019 10:04pm

There may be better ways to invest money. Unless the land is going to make you more efficient, increase profits or is adjoining the home block in not sure it's worth it. May get a better return elsewhere

simx · 20-09-2019 10:29pm

Mooooo wrote: »

There may be better ways to invest money. Unless the land is going to make you more efficient, increase profits or is adjoining the home block in not sure it's worth it. May get a better return elsewhere

It would set me with peice of mind owning it instead of renting, you’d put more into it if owned also, not that I abuse the land I rent I’d be quite a good tenent imo,I’m paying €200/ac for land x 20ac-€4000 x 15 yr- €60k..... €60k better paying for something you’d own at the end of the day, I get where you’re coming from, then also it would be something of an asset should something bounding be for sale in the future

lalababa · 20-09-2019 11:11pm

If you have cash and you really want land, then go for the near plot, and don't overpay. Best wishes.

older by the day · 20-09-2019 11:27pm

Grueller wrote: »

simx wrote: »

Hi lads just wanted to put this out and see what opinions are out there

Currently renting land for replacement heifers

No mortgage, no massive debts

There’s land a couple miles away from me for sale-severely neglected land, was rented for years and abused, some of the land is good but I’d say you’d turn it all to farmable once minded etc, also no water

Was thinking 5-5500/ac and a further 1500/ac spent on it to make it anyway viable, would take a few years before it would be getting to good production, Index 1 type land

Alternatively if I bought 12-14ac even if it was 12-15 miles away of top land and gave 10k/ac you’d have a better bet long term and should the need arise(if bounding land came up) could be sold again easier you’d imagine

Thanks in advance

Don't underestimate the time lost with an outside block. I have one 8 miles away and I have to cross a busy town to it. I would give sell it in a heart beat if a piece came to the market close to me.

I agree, I have a one hour back breaking spin in a tractor and another he back. I only count the cattle every 3days. A neighbour sees them from her window the other two. Tis a balls, out side farms

Jb1989 · 21-09-2019 1:26am

What's the story on tax if you ever sold this far away bit to buy a next door bit, there's no Swapping anymore I don't think I'm revenue's eyes, tax could put a damper on that idea maybe.

wrangler · 21-09-2019 2:50am

simx wrote: »

It would set me with peice of mind owning it instead of renting, you’d put more into it if owned also, not that I abuse the land I rent I’d be quite a good tenent imo,I’m paying €200/ac for land x 20ac-€4000 x 15 yr- €60k..... €60k better paying for something you’d own at the end of the day, I get where you’re coming from, then also it would be something of an asset should something bounding be for sale in the future

€200/ac wouldn't even pay the interest on €10000/ac land, there'll be lots of good land coming for rent from now on, You only have to look around at all the old farmers around and family with no interest.
If you're a good tenant you'll be left in it, and if you get sick of it (which you will) you can just walk away

simx · 21-09-2019 8:21am

Jb1989 wrote: »

What's the story on tax if you ever sold this far away bit to buy a next door bit, there's no Swapping anymore I don't think I'm revenue's eyes, tax could put a damper on that idea maybe.

That’s true I have to talk to my accountant before anything will happen anyway and give him scenarios

kerry cow · 21-09-2019 8:21am

wrangler wrote:

â‚¬200/ac wouldn't even pay the interest on â‚¬10000/ac land, there'll be lots of good land coming for rent from now on, You only have to look around at all the old farmers around and family with no interest. If you're a good tenant you'll be left in it, and if you get sick of it (which you will) you can just walk away

where does the money really come from to buy land ,
as we know the farm can hardly pay the intetest

Fine Day · 21-09-2019 8:50am

simx wrote: »

That’s true I have to talk to my accountant before anything will happen anyway and give him scenarios

I think there is some deal there if you sell land land that away from main holding to buy land closer of same value.

cute geoge · 21-09-2019 10:31am

kerry cow wrote: »

where does the money really come from to buy land ,
as we know the farm can hardly pay the intetest

The money comes from slavery to buy land ,working long hours ,often 15 hours plus per day,probably driving around in a ****ty van with no tax!!!!

wrangler · 21-09-2019 10:34am

cute geoge wrote: »

The money comes from slavery to buy land ,working long hours ,often 15 hours plus per day,probably driving around in a ****ty van with no tax!!!!

And there's no tax concession for buying land either, it has to be paid for out of profits after tax, I don't know how anyone does it.

Keepgrowing · 21-09-2019 12:29pm

wrangler wrote: »

And there's no tax concession for buying land either, it has to be paid for out of profits after tax, I don't know how anyone does it.

Really important point hence most land that’s being borrowed for is bought through a Ltd Co.

cute geoge · 21-09-2019 12:47pm

Keepgrowing wrote: »

Really important point hence most land that’s being borrowed for is bought through a Ltd Co.

Any advantage in that????
I know interest can be put against tax anyways but what about capital

Fine Day · 21-09-2019 12:53pm

6% stamp duty also for leo.

Keepgrowing · 21-09-2019 1:55pm

cute geoge wrote: »

Any advantage in that????
I know interest can be put against tax anyways but what about capital

Capital payments are profit so taxed as such in corporation tax rate is a fraction

amacca · 21-09-2019 2:06pm

Keepgrowing wrote: »

Capital payments are profit so taxed as such in corporation tax rate is a fraction

I'm not sure I understand exactly

It was my understanding that if you but land as a private farmer/sole trader then you could treat the interest payments only as a business expense and put them against profits (if any) thus making it beneficial by reducing your tax bill

however repayments on the principal of the lean were no deductible hence it wasnt very attractive to borrow to buy land at least coming at it from that angle

are you saying that all loan repayments can be treated as capital expenditure if land is purchased via a limited company set up?

C0N0R · 21-09-2019 2:28pm

I presume he means the tax on profit on the ltd company is less than the tax on profit as a sole trader?

jaymla627 · 21-09-2019 2:33pm

C0N0R wrote: »

I presume he means the tax on profit on the ltd company is less than the tax on profit as a sole trader?

13.5% Ltd company versus 40% plus at higher rate as sole trader, getting land out of a company isn’t simple though

Mooooo · 21-09-2019 2:42pm

amacca wrote: »

I'm not sure I understand exactly

It was my understanding that if you but land as a private farmer/sole trader then you could treat the interest payments only as a business expense and put them against profits (if any) thus making it beneficial by reducing your tax bill

however repayments on the principal of the lean were no deductible hence it wasnt very attractive to borrow to buy land at least coming at it from that angle

are you saying that all loan repayments can be treated as capital expenditure if land is purchased via a limited company set up?

No profit of Ltd company are taxed at 13.5, whereas soletrader/ private individuals it's whatever the marginal rate is. The other issue with land loan also is it starts out 50/ 50 principal/ interest but the interest portion decreases as time goes on so as the loan is coming near it's end tax liabilities increase.
As jay said there the issue with a company structure is getting the land out of it again

Keepgrowing · 21-09-2019 3:01pm

amacca wrote: »

I'm not sure I understand exactly

It was my understanding that if you but land as a private farmer/sole trader then you could treat the interest payments only as a business expense and put them against profits (if any) thus making it beneficial by reducing your tax bill

however repayments on the principal of the lean were no deductible hence it wasnt very attractive to borrow to buy land at least coming at it from that angle

are you saying that all loan repayments can be treated as capital expenditure if land is purchased via a limited company set up?

I’m not saying that st all. The capital element is the taxable amount is taxable at the corporation rate

Buford T. Justice XIX · 21-09-2019 3:08pm

Keepgrowing wrote: »

Capital payments are profit so taxed as such in corporation tax rate is a fraction

Wouldn't there be issues on transferring the land as part of a company? Like agricultural reliefs wouldn't be applicable on transfers of a company holding land?

amacca · 21-09-2019 3:13pm

C0N0R wrote: »

I presume he means the tax on profit on the ltd company is less than the tax on profit as a sole trader?

yes that makes sense all right it was the tax on capital payments bit had me confused......

mf240 · 21-09-2019 3:15pm

Your accountant should be first port of call.

amacca · 21-09-2019 3:16pm

Keepgrowing wrote: »

I’m not saying that st all. The capital element is the taxable amount is taxable at the corporation rate

sorry for extreme lack of understanding here, I know I'm probably a moron for not figuring it out at this stage but ..... by capital do you mean principal of the loan

or is it the company's capital invested in buying the land that is taxed?

Green farmer · 21-09-2019 3:21pm

jaymla627 wrote: »

13.5% Ltd company versus 40% plus at higher rate as sole trader, getting land out of a company isn’t simple though

What lads forget is any profits made belong to the company and not you. You’ll probably only be an employee, so you’ll have to pay the same taxes as if your self employed. You’ll also be talking about company having to pay employer taxes and a higher accountancy fees for company accounts. Then you’ve the problems of getting money out of land is ever sold.

mf240 · 21-09-2019 3:23pm

amacca wrote: »

sorry for extreme lack of understanding here, I know I'm probably a moron for not figuring it out at this stage but ..... by capital do you mean principal of the loan

or is it the company's capital invested in buying the land that is taxed?

The loan repayments consist of interest and capital repayments. The part of the repayments that are interest are an expense that's taken from taxable income. The part that are paying off the principle are not considered an expense and must be paid after tax.

amacca · 21-09-2019 3:26pm

mf240 wrote: »

The part that are paying off the principle are not considered an expense and must be paid after tax.

but if you are a profitable company then you will have more money (capital) to pay off the loan as this capital comes from profits which were taxed at a lower corporate rate?

am i getting it now?

mf240 · 21-09-2019 3:29pm

amacca wrote: »

but if you are a profitable company then you will have more money (capital) to pay off the loan as this capital comes from profits which were taxed at a lower corporate rate?

am i getting it now?

Yes that's it I think. But it's one for your accountant.

K.G. · 21-09-2019 3:44pm

I think lads ye re getting all con fused with the ltd company.my impression is poster is doing away nicely and is just wondering should they buy a.bit.of land
First thing id ask is have you 30 to 40 %of the money to hand.if you have are you happy with whay its.making for you already.thirdly is it a good investment, in general provided it close enough id say yes

simx · 21-09-2019 4:02pm

K.G. wrote: »

I think lads ye re getting all con fused with the ltd company.my impression is poster is doing away nicely and is just wondering should they buy a.bit.of land
First thing id ask is have you 30 to 40 %of the money to hand.if you have are you happy with whay its.making for you already.thirdly is it a good investment, in general provided it close enough id say yes

Have roughly 25% of money there and it’s making nothing in savings account tbh,still think I’d get money for full amount and keep a bit trickling into savings account for a rainy day etc... will probably have college fees in future but not for a while still, it’s close enough (2 ish miles)but am now wondering would I be better off going a bit further and buy some top land if possible and would be a better bet, if wanted to sell would be easier sell you’d imagine and prob better thrive in cattle etc., also drawing silage 8-10 miles isn’t unknown these, and if wet spring could draw slurry there if was stuck to get out at home (heavier type land)- same type land as I was looking at..... heavy land imo is always land you have to mind well or it’ll go bad fast whereas good land is always good land to a degree.....

cute geoge · 21-09-2019 4:23pm

The old saying was that land you could go into on Christmas was always worth buying,I used to be with a contractor back in the day and you would clearly see the difference between different types of land .Even land that would be perceived to be good land by everyone might in some cases be only heavyish land but well minded in the right hands.It is hard enough to buy good land but the only one bidding against you for heavy land might be the auctioneer .I see up the country great demand for good land ,last sales around here were up to €16k/acre

simx · 23-09-2019 11:05pm

cute geoge wrote: »

The old saying was that land you could go into on Christmas was always worth buying,I used to be with a contractor back in the day and you would clearly see the difference between different types of land .Even land that would be perceived to be good land by everyone might in some cases be only heavyish land but well minded in the right hands.It is hard enough to buy good land but the only one bidding against you for heavy land might be the auctioneer .I see up the country great demand for good land ,last sales around here were up to €16k/acre

Walked the land again yesterday with a friend to get an opinion, came to conclusion that if bought for 5k/ac def be 2200-2500/ac spent on it, also must be an acre of waste on it that can’t be forgotten either, the first year would be wrote off fixing up the place and then following years trying to build p&ks/ph levels etc

funkey_monkey · 23-09-2019 11:20pm

You seem to be in good financial position so personally speaking what I would do is hold off, keep saving and get a decent block nearby your home.
You're in a great final position and as is said with Brexit you might find cheap ground next year.
Far away blocks can be a pain, especially if it is your main block.

However, in saying that there not making land any more and if you see something you like to for it. You have to look long term when buying ground.

Being a complete bastard about it, you could rent some decent ground of some old boy and when they go to sell you'll be the sitting tenant with first dibs (at least that's the way it works where I am).

funkey_monkey · 23-09-2019 11:21pm

simx wrote: »

cute geoge wrote: »

The old saying was that land you could go into on Christmas was always worth buying,I used to be with a contractor back in the day and you would clearly see the difference between different types of land .Even land that would be perceived to be good land by everyone might in some cases be only heavyish land but well minded in the right hands.It is hard enough to buy good land but the only one bidding against you for heavy land might be the auctioneer .I see up the country great demand for good land ,last sales around here were up to €16k/acre

Walked the land again yesterday with a friend to get an opinion, came to conclusion that if bought for 5k/ac def be 2200-2500/ac spent on it, also must be an acre of waste on it that can’t be forgotten either, the first year would be wrote off fixing up the place and then following years trying to build p&ks/ph levels etc

Have you checked to see if there are any grants available which you could avail of?

simx · 24-09-2019 7:22am

funkey_monkey wrote: »

You seem to be in good financial position so personally speaking what I would do is hold off, keep saving and get a decent block nearby your home.
You're in a great final position and as is said with Brexit you might find cheap ground next year.
Far away blocks can be a pain, especially if it is your main block.

However, in saying that there not making land any more and if you see something you like to for it. You have to look long term when buying ground.

Being a complete bastard about it, you could rent some decent ground of some old boy and when they go to sell you'll be the sitting tenant with first dibs (at least that's the way it works where I am).

To get top quality land I’d have to leave the parish be 3/4 miles+ but would be good stuff that could get heifers out earlier, if Stuck spread slurry etc. I know there’s more time wasted with out blocks but doesn’t look like land adjoining will be for sale anytime soon, good land is always good land the way I see it have enough marginal land at home, I asked a friend of mine with great land about 8 miles away could he travel it Xmas day if he wanted, he said it could probably rain 2 inches Xmas eve and still go out the next day, sorry in a way I asked

. Like you said buying land isn’t a spur of the moment decision so has to be thought about in detail, yeah that renting thing is the way around here too

Buying land

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