buying land question

1chippy

first part:
what are the tax implications or costs associated by buying land.
second:
say if i was currently studying agriculture to be a future farmer and during study the option to purchase land came up would i be eligable for the relief available. ( i was not yet qualified)
third part:
If the answer is no. would a rent to buy situation be a method to make the most of this. say leaving the complete transfer until after qualified.
finally and most important:
bar entering the bank with a balaclava whats the best method to approach the bank.

Thanks.

Juniorhurler

1chippy wrote: »

first part:
what are the tax implications or costs associated by buying land.
second:
say if i was currently studying agriculture to be a future farmer and during study the option to purchase land came up would i be eligable for the relief available. ( i was not yet qualified)
third part:
If the answer is no. would a rent to buy situation be a method to make the most of this. say leaving the complete transfer until after qualified.
finally and most important:
bar entering the bank with a balaclava whats the best method to approach the bank.

Thanks.

I recently bought land. Banks are gangsters at the moment. They will lend a max of 70% of purchase price and will want the right to sell your first born into slavery if you miss a repayment. You will also have to pay for the banks costs too i.e valuations, solicitors, land registry etc. so allow €4000 extra for this at least.

If you can buy the land you can claim the stamp duty back when you get qualified provided you are still under 35 when you qualify. Beware that this could change in any budget.

dar31

relief on stamp duty for qualified under 35's. this is to end 31/12/12 i think maybe its 2011
tax relief on interest.
you will have to pay income tax on the capital part on the repayments.

i think there is some way of deferring/ reclaiming stamp after qualification, but this is of little use if it is to end.

ring and make an appointment with manager / assistant manager let them know what your intentions are, they will them arrange the necessary meetings.
dont go in empty handed, at a min last years or 3 acc and 6 mts bank statements. you will need a hell of a lot more, but at least it will show that you are thinking.
they have no problem lending, but every little detail will have to be 200 %.
the better it stacks up the better the margin, term, ltv, level of security

TUBBY

1chippy wrote: »

first part:
what are the tax implications or costs associated by buying land.
second:
say if i was currently studying agriculture to be a future farmer and during study the option to purchase land came up would i be eligable for the relief available. ( i was not yet qualified)
third part:
If the answer is no. would a rent to buy situation be a method to make the most of this. say leaving the complete transfer until after qualified.
finally and most important:
bar entering the bank with a balaclava whats the best method to approach the bank.

Thanks.

Bought few acres there while back too.
As far as tax goes, it depends on how much you are paying for the land. CGT is incremental up to 6%. Once you are a qualified farmer, at the moment anyway, you can claim this back but like last post said, this might and prob will IMO change. Also dont forget to factor in solicitor fees (a percentage of total) and also registry fee of EUR250.

As far as banks go, they will want all sorts of security for the land borrowing and also borrowing for land is a pretty high interest rate.
Be very wary of putting the aul lads house or that sort of thing up against it.

Best way to approach the bank is like any business. Have a business plan and projected figures along with current figures if you have any (assuming they are positive) to show that it is financially viable rather than just buying in hope. That will help with the approval.

keep going

you must have at least 30% of the price, no exceptions and most land loans are for periods of 15 years or less.this has huge implications for repayments and tax

raindodger

no tax relief on capital repayments so they come from after tax profit

Grecco

keep going wrote: »

you must have at least 30% of the price, no exceptions and most land loans are for periods of 15 years or less.this has huge implications for repayments and tax

what exactly are the Tax implications?

1chippy

so in lay mans terms any money i make off farming will be taxed and then i have to make repayments after that.. have a mortgage at moment and a small bit aside of the parents so i'm thinking the bank manager will laugh me out the door. Any one out there buy land on a rent to buy setup or do they exist?
Cheers for the replies.

funny man

1chippy wrote: »

so in lay mans terms any money i make off farming will be taxed and then i have to make repayments after that.. have a mortgage at moment and a small bit aside of the parents so i'm thinking the bank manager will laugh me out the door. Any one out there buy land on a rent to buy setup or do they exist?
Cheers for the replies.

That sounds about right but the most important part you have to make a profit first and be able to make the land pay for itself, not to many enterprises can do this. Never heard of the concept for land "rent to buy" but it works on other property just think land in this country is too sacred for that. Have you a piece of land in mind, is it on the market and have you approached the owner.

1chippy

have a bit in mind, owner tried getting sites on it but couldnt, up a real backward lane. average grazing ground sloping nicely so could make it better but needs a bit of tidying. aproached auctioneer who is relative of owner and waiting for feed back. have a feeling though they will still be chasing boom prices.

keep going

Grecco wrote: »

what exactly are the Tax implications?

simple enough,it means your yearly repayment is higher and principle is a larger part of it so in the early years you will have to be paying more tax on the payments

funny man

1chippy wrote: »

have a bit in mind, owner tried getting sites on it but couldnt, up a real backward lane. average grazing ground sloping nicely so could make it better but needs a bit of tidying. aproached auctioneer who is relative of owner and waiting for feed back. have a feeling though they will still be chasing boom prices.

is it on the market and if so have you a plan on how to pay for it.

1chippy

Ihave a few chickens and thinking of planting spuds and i'll live off that for a few years.;)
No work off the farm and thinking of throwing evrything including the kitchen sink at it. i have some sucklers and kinda use farm money for farming and nothing else. hope to run more sucklers on it and put that money back in too along with a bit from the off farm job, reckon its pretty doable just dont know how the banks will see it.

Juniorhurler

1chippy wrote: »

Ihave a few chickens and thinking of planting spuds and i'll live off that for a few years.;)
No work off the farm and thinking of throwing evrything including the kitchen sink at it. i have some sucklers and kinda use farm money for farming and nothing else. hope to run more sucklers on it and put that money back in too along with a bit from the off farm job, reckon its pretty doable just dont know how the banks will see it.

Exactly how I started off buying land 18 years ago. You will have hard days when money will be extremely tight, but if you have a go in 3 years time you won't even notice the repayments and you'll own the land at the end of the process. If you don't give it a right good rattle you'll always regret it. If your off farm income is secure you'll be fine. Best of luck with it.

funny man

1chippy wrote: »

Ihave a few chickens and thinking of planting spuds and i'll live off that for a few years.;)
No work off the farm and thinking of throwing evrything including the kitchen sink at it. i have some sucklers and kinda use farm money for farming and nothing else. hope to run more sucklers on it and put that money back in too along with a bit from the off farm job, reckon its pretty doable just dont know how the banks will see it.

I'd say if you explain it like that they will give you a quick answer.