Crop Share vs Cash Rent

[FarmerSmuck]

Looking to switch from Crop Share to Cash Rent on our land. We pay a 1/3 Fert and Chemical and Insurance. The Crop Share is ran through a Company. Does anyone know if cash rent can be ran through a company also? There is 2 share holders in the company and a few expenses paid out of the company also. (Taxes,Power,Insurance on the buildings)Our renter is a large farm and doesn’t want the hassle of 6-1/4’s of crop share. If anyone had some intel it would be great.

[AlbertaFarmer5]

If you have plans of selling any of the land in the future, I believe there are tax implications relating to capital gains exemption. If you are crop share you can claim to be a bona fide farmer, if cash rent you are not. But there are some folks on here who are much more knowledgeable about taxes than I am.

[jazz]

Cash rent is passive income so it’s going to be taxed harder inside a corporation I would think.

[FarmerSmuck]

The land is all owned in joint personal names if that helps any.

[poorboy]

Any decent farm should be able to work out a crop share on 6 quarters. The reason they want cash rent is because it is cheaper for them.

Might be time for a new renter.

[Highlander]

Cash rent agreements can be structured in such a way that the landowner can maintain his farming status for tax advantages. Shared management agreements and such seem to satisfy CRA. Talk to your accountant, there are a number of structural scenarios that can achieve this.

[blackpowder]

Absolutely. Bigger numbers need more knowledgeable accountants. And there are various ways.
Custom farming for landlord with his income equalling going cash rent for example.
True Crop sharing I would say, depending on the individuals of course, is a thing of the past. I hate it with a passion.
Depending on % too.
Consider yourself at the poker table.
We know we get 2 pots, lose 2 pots and fold or break on 6 other hands out of 10. We pay to play every hand.
MNP has studies that correlate.
Now consider paying a % of every hand.
You need the whole pot on the winning years to cover the blind in the losing years.
My last % deal, the owner couldn't make less than $75 and made as high as $170 and that was 8 years ago! (We are in a stable crop area).
You think about paying 20-25% of gross on a break even year.
I will never willingly do crop share ever again. Unless no more than 20% and no more storing grain seperate!
And also, the longer you're out of the game, the more of a pain in the ass you are as the times change.
There's a reason southern cotton sharecroppers were all poor.

[goalieguy847]

The other problem with crop share ( as an owner) is that its essy to hide a load or 2 of crop and your crop maybe only did 40 ... while tbe other fields did 60. Its easy for the farmer to screw the landowner...

[blackpowder]

Agreed. Without trust you have nothing.
Ask any retailer, it starts with nickels before it goes to dollars.
But....
If the landowner needs to count every penny, it leads to resentment in honest men. I have a list of examples.
Also, ask a grain buyer. Things get creative on that end too.
You want a grain check in your name for a percentage? So I pay all drying and trucking on your grain???? And you can't understand why your grain got sold in the lowest price contract?????
Go get a f k n permit book.

[blackpowder]

U haven't lived as a sharecropper until you use his 20 bpa 1200 bushel bins and scrambled to find seperate homes or better, bag it at your full expense for the rest. For someone who hasn't spent one dime in decades.
One guy I almost put a 10,000 b pile on his lawn. I literally had no where else.
Go get your own one ton and Scoop a Second.
Stay current or stay home.
Calling someone a sharecropper is an insult.

[blackpowder]

The other problem with crop share ( as an owner) is that its essy to hide a load or 2 of crop and your crop maybe only did 40 ... while tbe other fields did 60. Its easy for the farmer to screw the landowner...

Around here it's come down to grain cart scale totals.

[BTO780]

I have a neighbour who crop shared from a guy up the road who sat out in his truck all night to make sure every load was going back into his yard.
Some real trust there!!
To top it off he was 80.
Maybe he took out coffee and donuts.

[Guest]

Any decent farm should be able to work out a crop share on 6 quarters. The reason they want cash rent is because it is cheaper for them.

Might be time for a new renter.

Better yet farm it yourself
Or pay to get it custom farmed
The problem with share crop is that it’s too expensive for the farmer
Our expenses went up 35-100% on everything!
Your taxes might of went up 5-10%
Yet your income as share crop income has doubled or tripled

[Guest]

U haven't lived as a sharecropper until you use his 20 bpa 1200 bushel bins and scrambled to find seperate homes or better, bag it at your full expense for the rest. For someone who hasn't spent one dime in decades.
One guy I almost put a 10,000 b pile on his lawn. I literally had no where else.
Go get your own one ton and Scoop a Second.
Stay current or stay home.
Calling someone a sharecropper is an insult.

yep some of these landowners have lost touch with reality

[Old Cowzilla]

A young lad down the road I talked too just picked up 3 1/4 "s from a 80 year old. He had not received any rent money the last 3 years and was just looking to get enough to cover his living expense.
There is likely a reason some of the old boys have to park in the field during harvest. But if you park behind the new service truck and other shinny trucks at the end of the field nobody will see you anyway.