IFA Master Lease Updated to Refect Taxation and Cap Changes

The IFA Master Lease has been updated and re-launched in response to changes in the taxation system to incentivise long-term land leasing, and the recent reforms of the CAP.

These policy changes have resulted in a significantly increased demand for long-term leasing and the Master Lease has been revised to provide an up-to-date and comprehensive document for farmers undertaking long-term lease agreements.

Launching the revised lease, IFA President Eddie Downey said that the improvements in the incentives for long-term leasing in Budget 2015 were positive, and supported the IFA policy of increasing land mobility. He said, “The income tax exemption scheme for long-term leasing provides an attractive income incentive for the landowner and provides the farmer leasing the land with the certainty that they have use of the land for a set number of years, allowing them to invest in their farm business accordingly.

For qualifying long term leases taken out from 1 January 2015 there has been a 50% increase in the amounts of rental income that can be exempted

For qualifying leases the income tax exemption is capped at the following:

• €40,000 where the qualifying lease is for 15 years or more;
• €30,000 where the qualifying lease is for 10 to less than 5 years (i.e. 10 years or more but less than 15 years);
• €22,500 where the qualifying lease is for 7 to less than 10 years; and,
• €18,000, where the qualifying lease is for 5 or 6 years.

Exempt income can include the rental income earned from the leasing out of land, which includes the leasing out of SFP entitlements.

Mr Downey concluded, “Long-term leases provide an opportunity for new and expanding farmers to grow their business. Long-term leases are a useful support for farmers who are applying for schemes through the CAP and Rural Development schemes. Young farmers and new entrants who are applying for the National reserve or Young Farmers Top Up will particularly benefit from long-term leases. By contrast, the availability of land through the conacre system is always uncertain. In addition, with the abolition of milk quota, access to land near the milking platform will be of great importance.

The Master Lease has been updated by James Staines of Kennedy Solicitors. It is available from IFA offices and here.