McGowan Accountancy Services are experts in Farm Accounts. In this week’s blog, Nuala McGowan, CPA/ACA/AIA explains it is not a statutory requirement for the lessor, i.e. the landowner to be resident in Ireland.

s664 TCA 1997 is the section which provides for long leases. s664(a)(ii) states that: “the qualifying lessor” is an individual who –

(ii)has not after the 30th day of January, 1985, leased the farm land which is the subject of the qualifying lease from a person or persons, who is or are, or one of whom is, connected with him or her, on terms which are not such as might have been expected to be included in a lease if the negotiations for the lease had been at [arm’s length, and]31

[(iii)subject to paragraph (aa), has owned the farm land referred to in that paragraph for a continuous period of not less than 7 years beginning on the date of the contract to purchase the farm land concerned.]32

[(aa)(i)Subject to subsections (1A) to (1D), paragraph (iii) of the definition of “qualifying lessor” shall apply to an individual who purchased farm land pursuant to a contract entered into on or after 1 January 2024 for a consideration equal to the market value of the farm land at the date of the purchase of that farm land.

(ii)The reference in subparagraph (i) to the purchase by an individual of farm land shall be read as including a reference to the acquisition by an individual of a leasehold interest in farm land under a relevant lease and the reference in that subparagraph to the date of the purchase shall be read as including a reference to the date on which a relevant lease in respect of farm land is granted.]33

As you can see there is no mention of residence in the definition of ‘qualifying lessor’ or throughout section 664 TCA 1997 at all.

If all the s664 TCA 1997 conditions with regards to the qualifying lessor, qualifying lessee, qualifying lease etc are met then where the total income of a qualifying lessor consists of rental income chargeable to tax under Case V of Schedule D and includes income from the leasing of farmland let under a qualifying lease, the qualifying lessor is entitled to a deduction which is the lower of the overall Case V income or the specified amount (in this case €22,500 as it is a 7 year lease).