Loan for land

The problem I encountered was they weren’t interested in what I had in savings or my off farm employment they wanted to see my tax bill, even though I was making good money on my livestock enterprise and had a record of leasing a farm for over 10 years seemly I wasn’t paying enough tax, they said I would be better off with a higher tax bill going forward if I was looking for money in the future

I believe the bank wants the genuine accounts that will be sent to revenue on your taxation date, don't think prepared accounts, or makey up figures will hack it,

I know, just saying it's not like it used to be.

That's interesting, my loan wasn't on the farm account at the time so was unaware. So at the end of a year, the interest portion of the loan can be written off?

No he said the repayments on 150kover 15 years was 1300/ month. But you could make higher payments if you wanted to. This would reduce the lenght of the loan

You are right I took out a machinery loan this year for 3 years and it is the same rate as the land loan. Wonder how the below will change things. I have loans a plenty plus mortgage. 2 things will say all abour repayment capacity and they can be a millstone. Anyone with young family or thinking starting a family think long and hard. Plenty of land to rent and you can walk away from it and the rent tax deductable.

No why would be? Lots of lads have cars, jeeps and farm machinery on lease or HP and no issue with it. Why rent of land any different 260 an acre to rent land?

Just for example. If you rented that and went into all the schemes damn near get the land and sheds for nothing. Better value than trying to pay back 2 million plus cost to buy. Would be 100k a year for 30 yrs if bought it at 2 million. Goinf to make same money farming it paying off to own it or rent it.

Yeah you need to go into organics like I am in that will be worth 19k a year acreage on top of what you worked out. i am in sucklers so BEEP and BDGP as well for me.

Most of farming is a fools game at moment with exception of dairying. KG who had you the loan with assume KBC or Ulster as BOI and AIB who I am with not come close to that. 7.5 stamp duty too with buying land would be 150k on that place if sold.

The killer with farming are the costs.

You did well; my security was about 3 times loan so roughly 60 to 66 per cent. But my chargeable assets, not secured, (loan on 1 folio only) ie rest of farm loan prob 5% of total value.

Only ever look for last 3 years accounts with me.

When you borrow over a medium or long period it mostly interest in the earlier years and some capital repayment and the opposite towards the end.

If your repayments were 15.5k/ year over the 15 years you would pay about 82500 in interest.

If you paid 20k in capital repayments in the first year @ an interest rate of 6% you be paying 9k in interest the first year approx. Your interest would drop by 1200/year approx until you had the loan paid in 7.5 years.

My advice would be don’t count your chickens before they hatch!

1) It might never be put on the open market

2) Some fella might decide that’s the parcel he/she wants and blow you out of it

3) The bank might be awkward supplying funds or you end up with a massive interest rate possibly 7% plus

Best of luck, I genuinely hope it goes your way and smoothly too.

Interest rates are climbing fast. I have a tracker. The rate on it now is nearly 4.5%.it will probably raise another 1-1.5% this year. Assume banks charge another 1% margin minimum on this.

That give an agri lending rate by late summer of 7%. Maybe 5 year fixed will not be that high but three year should be. On 170k that is repayments of about 14.5k/year. Interest will be about 11.5k so effectively you are paying less than 10k net. Over 15 years it's about 17.25/year or 12.5 after tax

You are lucky in one way in that you have the stock and everything else in place to set the place up. Remember you can pay off money early but banks dislike refinancing. However remember as @J.O. Farmer indicates thate is many a slip between cup and lip.

The interest rate hikes along with reduced milk price will soften land prices. The 15k+ on 100/ acre+ farms will mean a lad borrowing a million will be paying 80k+/ year over 20 years.

Thanks lads for all the advice, for starters I’m not counting any chickens yet!,it’s just something that might present its self for sale hence why I am still holding the rented land but I always like to have a good think and discussion about these thing,read some great advice here over the years

With the new payments I should be getting around 15000 a year without acres if it doesn’t reopen so going by what you’re saying i pay tax on 5000 of this after my rent is subtracted? Where if I purchase this piece of ground I will be paying tax on the 15000 minus the interest

If I got a loan of 150000 and paid off 15000 this year and next and then when I sold my cattle usually around 50, if they made around 85000 and I took this off the loan how would this work? I could build back up my stock from calfs, off farm income and a stocking loan, I never mind putting my own personal money into something when I see a return and I think livestock is a good option

all ideas or comments good or bad really appreciated

I asked my accountant this before that for any reason I gave up farming and sold my cattle and didn’t repurchase how would the tax go and he said you would just pay tax on the profits made on the livestock, he keeps my tax fairly good as I’m working full time off farm

But banks if given out loans want to see your paying high enough tax to show your making money, was thinking about a loan before and I was more or less told I wasn’t paying enough tax,they couldn’t understand by my accounts what I was doing with the money and then I have someone else ringing from the same bank about money building up in my account the past few years, wanting me to call in about special saving schemes or incvestments, it’s hard to win 🙄

I see you recently purchased land and your a dairy farmer? I thought it should be easy enough deal with the banks when you are milking, I noticed the few times I had to deal with them, everything is grand until you start dealing headquarters,