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Purchase of entitlements

  • 12-02-2009 5:52pm
    #1
    johnstown
    Registered Users, Registered Users 2 Posts: 104 ✭✭


    I am considering purchasing entitlements on 2 Ha that I currently have none for.

    I rang a local auctioneer and he said he has some for sale as follows:

    1) 600 per acre for sale at 3 times face value

    This would give an annual payment of €3000 for an outlay of €9000.

    Sounds like an extremely high entitlement value.

    2) 140 per acre for sale at 2.5 times face value.

    This would give an annual payment of €700 for an outlay of €1750.

    I know that the DED average for the area is €330 per entitlement, so assuming entitlements are averaged in 2013, then the second option sounds like it might be best value.

    Can anyhow advise what the story is from a taxation perspective if I purchase these entitlements?

    Thanks


Comments

  • #2
    ravima
    Registered Users, Registered Users 2 Posts: 848 ✭✭✭ravima


    firstly it si INCOME, so the 1% Income levy will apply and secondly, the income will atract Income tax at your highest rate when you do up your accounts.


  • #3
    johnstown
    Registered Users, Registered Users 2 Posts: 104 ✭✭johnstown


    Is there a capital allowance on the initial outlay for the purchase of the entitlements?


  • #4
    ravima
    Registered Users, Registered Users 2 Posts: 848 ✭✭✭ravima


    I haven't the foggiest idea. Ask your accountant.


  • #5
    Curious Geroge
    Registered Users, Registered Users 2 Posts: 1,015 ✭✭✭Curious Geroge


    johnstown wrote: »

    1) 600 per acre for sale at 3 times face value

    This would give an annual payment of €3000 for an outlay of €9000.

    Sounds like an extremely high entitlement value.

    2) 140 per acre for sale at 2.5 times face value.

    This would give an annual payment of €700 for an outlay of €1750.

    Farmer journal did a piece on this back in 2007

    http://www.farmersjournal.ie/2007/0303/farmbusiness/business/payments.shtml

    Since that was 2 years ago and 2013 is something that we're not sure about yet, I would think that the percentages would gone down..
    johnstown wrote: »
    I know that the DED average for the area is €330 per entitlement, so assuming entitlements are averaged in 2013, then the second option sounds like it might be best value.

    Can anyone explain more detail on this.. Would'nt this see a 75% min decrease in farm income in ireland ???


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