Q&A: Master lease for tax exempted DIY leasing
IFA has developed a master lease that farmers can use in land leasing agreements.
Income derived from leasing land on a long-term lease may be exempt from tax up to certain thresholds.
To qualify, a lease of farm land must be in writing, or evidenced in writing, and must be for a definite term of five years or more. Leases between close relatives do not qualify.
The IFA master land lease meets the necessary criteria.
You can use the IFA’s master lease of agricultural land, which can be used between farmers for the purpose of setting up long-term lease agreements.
The lease requires the signature of both farmers (lessor and lessee) involved, and the signature of an independent witness.
You may wish to engage a professional consultant, but there is no requirement for a solicitor or an auctioneer to assist with the completion of the lease or to witness the lease agreement.
No. The master lease is a comprehensive template document that provides many options for the individuals involved.
Where a section of the lease is deemed to be not necessary by the two parties involved, it can simply be crossed out.
It’s important to note that to qualify for the long-term leasing tax exemption scheme, a lease must be for a definite term of five years or more and must contain:
* the names and addresses of the lessor(s) and lessee(s).
* specifics on the acreage, address, location etc. of the land which is the subject of the lease.
* the terms of the lease.
* the signature of the lessor(s).
Yes. Farmers, who entered into land leasing agreements since April 3, 2012, are required to register the lease with the PSRA. The tenant (or a third party authorised by the tenant) is required to provide the following information to the PSRA in respect of the lease agreement:
* The commencement date of the lease.
* The rent (if any) being paid for the lease.
* The frequency at which the rent will be reviewed for the land (if there is a rent review during the lease term).
* Particulars relating to who is liable (tenant/landlord) in respect of rates, insurance, service charges and repairs to the property.
* Particulars relating to any break-clause in the lease.
This information must be registered with the PSRA within 30 days after commencement of the lease (that is, within 30 days of receipt by the tenant of the stamp certificate from the Revenue Commissioners).
There is no fee for registering the information, which can be done online.
While the obligation is on the tenant (farmer) to register the lease, this can be done by a third party on behalf of the tenant, at the tenant’s request (such as a solicitor, auctioneer, other party).
Yes. Land lease agreements which comprise a written document are liable for stamp duty. It is payable by the lessee (person leasing the land) at a rate of 1% of the annual rent payable under the lease.
For example, if the annual rent payable on leased land is €10,000, stamp duty of €100 is liable.
The lease itself must not be registered with/submitted to the Revenue Commissioners.
Instead, Form SDR3 must be filled out and submitted.
This form can be sourced from the Office of the Revenue Commissioners, National Stamp Duty Office, Dublin Castle, Dublin 2 (LoCall 1890 482 582).
Alternatively, the form can be returned online. By filing the return electronically through the Revenue On-Line-Service (ROS), allows the return to be filed, the stamp duty due to be calculated and a stamp duty certificate to be obtained, all in the same online transaction.
If you are leasing BPS entitlements with your land, you must notify the Department of Agriculture of this, to ensure that the entitlements remain in your name and revert to you at the end of the lease period.
This is a straightforward process.
