Personal Finance

Taxes on farm land sales

  • Last Updated:
  • Aug 1st, 2019 8:47 pm
[OP]
Member
Jul 21, 2019
286 posts
492 upvotes

Taxes on farm land sales

Do you have to pay taxes when selling farm land in Ontario, let's say farm land worth $900,000. I have heard if it's under $1,000,000 there is no taxes.
Last edited by Brandon26 on Jul 31st, 2019 2:54 pm, edited 1 time in total.
5 replies
Jr. Member
Dec 25, 2015
125 posts
69 upvotes
Brighton, ON
It depends..If it's a qualified farm property ( see ) then you get a capital gains deduction. If it's just a hobby farm and you aren't in the business of farming, then you'll pay capital gains tax.
[OP]
Member
Jul 21, 2019
286 posts
492 upvotes
It's farmland that is used for business, however we are not the ones who farm it, we pay someone else to farm it for a fee and we get the remaining profits if that makes a difference.
Jr. Member
Dec 25, 2015
125 posts
69 upvotes
Brighton, ON
For some reason the url disappeared in my post. see this
You'll have to dig into the cra site. I think that you have to farm it yourself to be a qualified property.
Perhaps talk to a tax accountant for a professional opinion.
Member
User avatar
May 31, 2018
296 posts
451 upvotes
Saskatchewan
As far as I know/remember, there is a $1m capital gains exemption for actual qualified farmers (2 years of ag being your major source of income). The capital gain is the difference between the ACB (adjusted cost base) and the sale amount of the land. Anything over $1m capital gain exemption is taxed at 50% of your tax rate.

If you are a landowner only and ag is not your major source of income you will pay tax on the entire capital gain, at 50% of your tax rate.

For example (simplified), I buy land for $400,000, sell it for $1.9m. As a farmer I get the exemption so only pay tax on $500k, my tax rate is 42% so owe CRA $105,000. If I was not a farmer then would owe CRA $315,000.
Deal Fanatic
User avatar
Jan 27, 2007
5041 posts
921 upvotes
Peterborough
Yeah, look into QFP Cap Gains deduction. You not having farmed it is probably going to be an issue.

If it is QFP watch out for Alt Min Tax.

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