Just out of interest what percentage of purchased land is made up by debt?, and what by cash?
Just out of interest what percentage of purchased land is made up by debt?, and what by cash?
Yea, I would think that a large proportion of larger loans will be on the interest only option. These loans are great as it gives you the option to repay when there is surplus cash, but unless there is a windfall most businesses just don’t bother.There must be a large proportion of farmers that have bought land on interest only in the last 20/30 years, to not be able to repay the capital as well is something I would not do. I can't make enough per acre to make buying land at today's price an attractive option. You need cash in the bank IMO or do less work and don't worry about your neighbors. Debt is good when you can pay the bank and make a profit. The % from building rollover etc must be very small in the UK.
The capital could be repaid with a future capital disposal. In that case the cost wouldn’t necessarily be £1m for a £600k repayment. Due consideration should also be given to where the assets are held. The chap in charge of HMRC is quite helpful in these matters…….Yea, I would think that a large proportion of larger loans will be on the interest only option. These loans are great as it gives you the option to repay when there is surplus cash, but unless there is a windfall most businesses just don’t bother.
there will be a lot of the next generation that will be given the farm and the interest only loans, therefore all they can hope for in their farming career is to get it repaid, whereas dad was the successful one that bought the farm!
A lot of people forget that the loan capital has to be repaid after tax. So to repay £600k capital you need to earn £1m.
A capital disposal may incur tax though if outside the rollover threshold period, I get what your saying about Rishi thoughThe capital could be repaid with a future capital disposal. In that case the cost wouldn’t necessarily be £1m for a £600k repayment. Due consideration should also be given to where the assets are held. The chap in charge of HMRC is quite helpful in these matters…….
Similar to paying a rent in terms of tax treatment. 5% interest on £10k is a £500/ac rent though.if your paying an interest loan am i right in saying you can offset the monthly interest payments against tax meaning it might cost you very little?
In the context of doing it for the next generation there can be a capital uplift on death which doesn’t attract CGT, likewise is exempt from IHT.A capital disposal may incur tax though if outside the rollover threshold period, I get what your saying about Rishi though
Indeed, it won't be long the man on the street will be muttering ‘off with their heads’.How long is Rishi and the conservatives going to be in power though?
doesnt sound like the worst idea then?In the context of doing it for the next generation there can be a capital uplift on death which doesn’t attract CGT, likewise is exempt from IHT.
Matter of opinion I guess. We hear land prices are increasing so the demand is there.doesnt sound like the worst idea then?
Over 4% I would think. All good on interest only until values slideWhat sort of interest rates on long term loans are available atm for say 25 year loan on variable, 5%?
It’s all about location!
Blocks of 100 acres go for 15-20k / ac here.
Some 3 acre pony padddock potentials are £100k
I don’t think Some of you Northen monkey’s who wear those skirts realise Just how variable land prices are.
Granted as a % of total uk sales this area wont be high but averages are just that
Ah, so is that why you English idiots come up here and buy it, then make a tit of it??