Farmland Lease

[polo1665]

The way it was explained to me was the 10 acres or larger then the agricultural portion (6 acres of 11 at my house) could be CAUV without reporting income. At least that is what I have been able to do for the last 3 years on this and another parcel that is 10 acres.

My savings are substantially greater than $50. I would not bother with it for $50 either.

That's why I think that different counties interpret these laws in different ways. You're at the mercy of the person your talking to at the county courthouse I think. Glad it worked out well for you. I wish I could make it work for us.

 

[JohnBoyMD]

Unfortunately, you guys were right

Doesn't work with just 3 acres. The form to get the ag assessment does mention something about income, but it doesn't say how you have to make if under 5 acres. When I called the county, he didn't have the exact amount, but any amount was certainly more than I can earn with the land. Oh well, I'll be $300 richer than I was last year and still don't have to do anything with the back lot.

 

[deere755]

I lease land here in illinois and I always get everything in writing, even with my inlaws land. It just saves a lot of hard feelings and you can always fall back on it if there is a problem. In fact the F S A office now requires you bring in a contract from all your landlords if you are reporting acres. I would find out what the going rate is for cash rent in your area and remember a 3 acre patch isn't going to bring what a good 40 acre piece of land will bring. Cash rent is the best way for the landowner not always the farmer but most of the land around here is going that way. Here the landowner pays the taxes and lime in most cases and the tenant pays all other expences and gets all the crop.

 

[Bear Foot Farm]

A while back I posted the same question and ShenandoahJoe was kind enough to send me a copy of the lease he uses. I decided against it, like I said the guy is a good neighbor and has given me no reason to believe lhe is not trustworthy. He is as much at risk without anything in writing as I am, as far as I see it. If he is willing to trust me, then I will trust him.

Without a written lease, you can't claim any tax deductions.

It's also reportable farm income.

"Trust" is not a good way to conduct BUSINESS

 

[polo1665]

Without a written lease, you can't claim any tax deductions.

I'm not claiming any tax deductions, not sure how I could if I wanted to.

It's also reportable farm income.

I don't own a farm. It would be considered income from rent. Not sure how that applies to the conversation though.

"Trust" is not a good way to conduct BUSINESS

If this is your attitude when you deal with your neighbors, then I am glad I don't live next to you. Distrust breeds distrust in this environment, we aren't talking about a high stakes business deal.

 

[Bear Foot Farm]

If this is your attitude when you deal with your neighbors, then I am glad I don't live next to you. Distrust breeds distrust in this environment, we aren't talking about a high stakes business deal.

It has nothing to do with "distrust" and everything to do with maintaining records.

The IRS doesn't care if it's "high stakes".
They just want documentation.

You might not be able to use it as a tax deduction, but most likely the farmer can IF he has something to prove he actually rented the land

 

[ShenandoahJoe]

+1. The farmer can deduct it as a business expense, and the landlord can get into the land-use property tax exemption. If there's something in writing. It's not how much you trust the honesty of your counter-party, it's how much you trust the benevolence of the tax man.

 

[polo1665]

It has nothing to do with "distrust" and everything to do with maintaining records.

The IRS doesn't care if it's "high stakes".
They just want documentation.

IRS?
I apologize, I thought this thread pertained to questions about property taxes and written leases. I must of missed the part when it switched to the IRS and improper documentation of income. Please excuse me for not keeping up.

You might not be able to use it as a tax deduction, but most likely the farmer can IF he has something to prove he actually rented the land.

I sign documentation of the lease for the farmer so he can pursue whatever he believes he has coming to him.

I didn't mean to upset you by having this "handshake" type relationship with my neighboring farmer, it really seems to irk you and I apologize for that. I will leave it at that as I really don't wish to turn this thread into something it was not intended to be. (read the original post)

+1. The farmer can deduct it as a business expense, and the landlord can get into the land-use property tax exemption. If there's something in writing. It's not how much you trust the honesty of your counter-party, it's how much you trust the benevolence of the tax man.

ShenandoahJoe, I do very much appreciate the time you took to PM me the lease you use, it was very nice of you.
As far as documentation for the farmer goes, see above.
I believe I already covered my situation regarding agricultural use tax reductions.