Title search – Tenants can also search for the title of the land for rent to ensure that they enter into a contract with the person who owns the land. A title search can be conducted through the Ontario Land Registry. Most of the time, when we talk about fair rent, we are really talking about a fair and equitable rent, based on the equity contributions that both parties are prepared to make in this tenancy agreement. For a landowner who wants to generate a higher rent than the current local cash rent and is willing to take some risks, a lease with harvest share should be considered. Flexibility – Can you customize the rental in case of a change? The lease may include a clause that would terminate the lease in the event of natural disasters. For example, if the land was flooded and the tenant could not use the property, it would be unfair to insist that the tenant continue to pay the rent in cash, unless the initial rent took into account the risk of flooding. Other unforeseen circumstances are the installation of a highway, a pipeline, an oil well. on leased land, resulting in additional inconvenience and operating costs for the tenant. In some cases, it may be considered desirable to renegotiate the terms of the tenancy agreement or to compensate the tenant for the additional costs or income that may be earned instead of terminating the lease. Clarity – Are each party`s obligations clearly defined in the written lease? No property transfer – It is important for the landlord and tenant to discuss their expectations in case the owner sells the farm property to a new owner for the duration of the lease. A fair agreement will attempt to limit a balance between the lessor`s desire, his ability to sell the farm and the tenant`s desire to pursue the lease agreement.
Crop-Share-Leasing is one of the fairest ways to rent arable land and remains popular, especially in the southwest and panhandle of Nebraska. A lease is a contract by which the landowner and tenant distribute agricultural expenses and production. For this reason, both parties experience the risk associated with high and low price and production. As a general rule, a lease is taxable, unless it is expressly exempted under Part I of Schedule V of the Excise Act, which could apply in limited situations, such as real estate, which is intended for long-term stay. The rent paid as a portion of the crop is not subject to the HST. The treatment of cash rents for HST purposes may also depend on the landlord`s total income. A business (including a renter who leases real estate) does not need to register to collect and transfer HST if its gross tax and zero rating sales are less than $30,000. Landlords whose only source of business income is rent with rental incomes of less than $30,000, do not need to register when they can choose to do so.
Rental duration – Shows when it starts and how long it lasts. While not a basic condition of a lease, this section should also consider the renewal of the lease if the parties wish to maintain the lease for a one-year period, including when and how such an extension will take place. The tax treatment of income received by a lessor under a plant-based lease depends largely on the amount of the lessor`s participation in agricultural activities governed by the lease. Where the lessor participates “substantially” in the lease, all income from the lease is subject to self-employment tax. The lessor will report revenues and expenses on Schedule F, IRS Form 1040. If the lessor is not involved materially, the income is not subject to the self-employment tax and the lessor will report income and expenses on Form IRS 4835.