A Safe Investment in Forestry

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A Safe Investment in Forestry

Over the years there have been many so called “safe investments”, however forestry seems to have been overlooked in this way by many until now. Forestry is an important asset to our country for both financial and climatic reasons and the Irish Government has recognized this.

Forestry is an important raw material for industrial production as well as providing a natural habitat for wild life. It also helps maintain our national carbon footprint standards and can be harnessed as an idyllic recreational resource. As a result of these uses, the Irish Government have provided tax breaks, premiums and plantation grants for forestry, when combined make forestry a decidedly attractive investment.

The Department of Agriculture will compensate those planting forestry with planting grants of up to 100%, 10 – 15 year premiums and tax exemptions from the most onerous of taxes. Forestry grants, premiums and the sale of thinning and clear fell are all exempt from income tax in addition to the exemption of income tax on company dividends paid out in respect of woodland. Gains made from the disposal of felled trees are also exempt from Capital Gains Tax.

According to the SCSI Market Report published in April 2016, the average price of forestry land in Ireland is €9,838 per hectare. Owners of forestry land can avail of capital investment grants for plantation of up to €5,750 per hectare and premiums of up to €635 per hectare for up to 15 years. With the correct afforestation partially paid for using the aforementioned grant, one can earn up to €9,525 in premiums alone over a 15-year period before any earnings from the sale of thinning’s or clear fell.

If your wish is to have an investment which requires little maintenance, tax benefits and relieves the necessity to chase tenants for rental payments, then one would have to consider forestry as a good investment asset.

BV Commercial Real Estate are seeking land suitable for forestry plantation for finance approved clients. For more information, contact our Commercial Team on forestry and agriculture Gerard Mahon or Alan Loughrey on 091 745 240.