Leasing land can bring huge advantages with tax incentives
Many farmers are still unsure of the rules despite increased attention, writes Cathal Geoghegan and Anne Kinsella
Land leasing, in particular long-term leasing, has become an important topic of debate among the farming community in recent years.
In Budget 2015, land leasing options were made more attractive through a 50pc increase in the tax reliefs available on lease income. In Budget 2016 it was announced that the current reliefs would remain as per 2015.
With a switch in policy focus to land usage as opposed to traditional land ownership, this major policy measure has been put in place to stimulate greater activity in the long-term lease market.
However, despite the enhanced tax exemption thresholds and the increased attention leasing has received in the farming media, recent research has shown that many farmers are still unsure of the exact rules surrounding the leasing of land.
The uncertainty may be a reason why the supply of land available for long-term leasing remains relatively stable.
Basic Payment Scheme
In an Irish context, issues arising for farmers that leased out all of their land in 2013, and the subsequent implementation of the Basic Payment Scheme (BPS) with regard to new entitlement allocations illustrates how links between land access entitlements and subsidy payments in the past may influence farmer behaviour in the shorter and longer term.
Even the slightest ambiguity or uncertainty surrounding details and conditions needs to be quelled, otherwise such rumblings may be sufficient to dissuade some farmers from taking that vital first step.