Long-term land leasing is getting increasingly popular, and Gordon Peppard, Teagasc Collaborative Farming Specialist, explains the many benefits this brings.
Some of the points he highlights include enhanced tax relief incentives, advantages for the lessee and details on stamping the lease.
Enhanced income tax incentives makes long term land leasing more attractive to landowners who do not wish to farm the land themselves.
Table 1: Income tax incentives for long-term land leasing
| Term of Lease (Years) | Max Tax free Income/year |
| 5 – 7 | €18,000 |
| 7 – 10 | €22,500 |
| 10 – 15 | €30,000 |
| >15 | €40,000 |
If Basic Payment Scheme entitlements are leased out with the land, the value of these entitlements can be included with the land lease fee and qualify as tax free income under the relevant thresholds. These entitlements should be detailed in the lease agreement.
If land is co-owned between a husband and wife for example, the relevant thresholds shown in Table 1 can be doubled. Legal proof of co-ownership such as land registry folios naming both parties as co-owners will be required.
There is generally a willingness of the lessee to invest/improve the land during their tenancy, such as liming, soil fertility enhancements, reseeding and fence maintenance, where a long term commitment is made.
Qualify for retirement relief from Capital Gains Tax on transfer or sale of the farm. Land can now be leased for up to 25 years without impacting on the landowner’s ability to qualify for Retirement Relief from Capital Gains Tax.
Where land is let on a con-acre basis, the landowner may not qualify for Retirement Relief on Capital Gains Tax if the farm is sold or transferred to a family member. Leasing the land long-term provides the structure to avoid this happening.
Advantages for the lessee (active farmer) of a long-term land lease:
– Security of tenure
– Better financial justification for the required investment
– Farm buildings may come with the land that will reduce capital investment
For more information on long-term land lease, watch the video, or see here.
LSL News.