How Does Property Transfer Tax apply to Farm Purchases?
One of the major closing costs Buyers in the Province of BC can expect is the Property Transfer Tax. We are often asked if there is any exemptions or rebates for Farming families purchasing farmland. Unfortunately the short answer is no. The property purchase tax is applied to all real estate purchased from house and acreage, to hobby, to commercial farms in BC at a rate of 1% on the first $200,000, 2% between $200,000 and 2 million dollars and 3% on values above 2 million dollars and a further 2% on purchases over 3 million dollars. However if your purchase includes machinery or livestock in the total purchase price the value of those items should be deducted from the sale price as the tax only applies to the land.
There is one circumstance where the property transfer tax may not apply however. If the farm is held by a Ltd Company incorporated in BC ( like ABC Farms Ltd ) and the owners/shareholders of ABC sell the Ltd Company that owns the land to another ltd company the sale is deemed to be a ‘sale of shares of the company’ or a share sale. In this instance the Company is not selling out the asset (farm) but rather it is a change in shareholders which does not trigger the transfer tax.
Buying and Selling big ticket items can be an intimidating process and that is why it is always important to utilize your trusted accounting and legal professionals during the transaction as well as using a realtor with the experience and background to explain and guide you throughout the process. Our BC Farm & Ranch Realty team has over 200 years of experience and the vast majority of us are or where farmers ourselves. Contact one of our associates if we can be of assistance buying or selling acreage now or in the future.