Capital Gains & Tax Considerations
When Selling Farmland
What farmland owners need to know before listing.
Understanding Capital Gains on Farmland
When you sell farmland for more than you originally paid, the profit is considered a capital gain. In Canada, 50% of that gain is typically taxable—though recent federal proposals suggest this inclusion rate may rise in the near future.
How It Impacts Sellers
For landowners planning to sell, a higher inclusion rate could significantly increase your tax bill. Selling before any policy changes take effect could reduce tax exposure. It’s also important to determine whether the property qualifies for the Lifetime Capital Gains Exemption (LCGE), which can offset taxes on qualifying farm sales.
Plan Ahead to Maximize Value
- Review ownership structure (personal, corporate, joint) with an accountant
- Consider estate implications if you’re nearing retirement or planning a transition
- Keep documentation of land improvements and historical costs to reduce gains
Want to know how potential tax changes could impact your sale?
Contact Ted Cawkwell to discuss your options.
|
