What to know when it comes to land leasing

Auctioneer and chartered surveyor, John Corridan, offers some advice for readers when it comes to land leasing

THERE are many ways in which farmers can structure the business of farming, from that of the traditional sole trader to the more varied options including partnerships, incorporation, share farming, share milking and lastly where no successor is identified and the landowner wishes to retire or scale back then land leasing becomes the more suitable option.

To encourage land usage over land ownership the Finance Act 2014 granted landowners wishing to scale back with generous tax advantages for leasing their lands on qualifying leases to active farmers.

Landowner income tax benefits from long term leasing: • Leases of greater than 5 years and less than 7 years are exempt from the first €18,000 rental income • Leases of greater than 7 years and less than 10 years are exempt from the first €22,500 rental income • Leases of greater than 10 years and less than 15 years are exempt from the first €30,000 rental income • Leases of greater than 15 years are exempt from the first €40,000 rental income How to qualify: A qualifying lease is a lease of farm land which is in writing or is evidenced in writing for a definite term of five years or more. The lease must be on an arm’s length basis i.e. the landowner must enter into the lease with an unconnected person.

Lease structure: Entering into a lease of land for a long period of time could be seen as a daunting task. Questions will arise as to how well the land will be managed, what happens if it is not well managed, what condition will the land be returned in, how shall entitlements be protected, what if an accident occurs on the lands, how shall disputes be settled . All these questions and more will be set out in the lease document and it is imperative that farmers seek advice from suitably qualified professionals prior to entering into any agreement to ensure that maximum tax benefit and legal protection is afforded.

Notwithstanding the above, landowners may be more comfortable with letting lands on a conacre basis and while this does not confer an income tax advantages and it does not encourage long term investment in lands and buildings it may just suit both parties to give and take lands on shorter term basis.

Corridan & Associates sell and lease land. We seek out suitable incoming farmers and negotiate terms that best protects the landowner’s interests. To place your lands on the market on short or long term lease call John on 068 57463 or 086 8145184.