Farm Property and GST

RandyDalton

Inspired Forum Member
REIN Member
Apr 21, 2008
159
3
18
59
Hamilton, Ontario
#1
We just put in an offer for a Farm Property in Vineland and realized that the portion of the property used for farming is GST applicable, even on a resale. Does anyone have any experience on this issue? Since the home and 1 acre is not GST applicable how and who should decide what % of the purchase price is charged GST? Should I obtain a GST registration number for operating a farm since part of the land is leased out to a neighbour for farming so that I can get the GST back? What impacts does this have when I choose to sell the property down the road?

Appreciate any help on this.
Randy Dalton
 

retiredby50

New Forum Member
Registered
Mar 4, 2008
114
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0
Cochrane, Alberta
#3
Tread very carefully, Randy,

We had a pinhead for an accountant, who advised us to get a GST # and get the GST back on the purchase of our land. The purchase price was 172K for 40 acres west of Calgary, 10 years ago, so we got back about 12K I think.

Now circumstances have changed, and we may be having to get out, and give them back the GST on this land. We have now just found out that they may demand the GST back on TODAY`S value.

Due to our location, and the fact that there is a house on the place, it`s probably worth 1.5 to 1.8MIL!!!!!!!!!!!!!!!!!!!!!!!!!!!! That`s 50K per MIL, even if they figure it out at today`s GST rate of 5%. All because we took advice from someone who didn`t know what they were talking about.

All I`m saying is, find a VERY GOOD accountant before you enter into something like this. And smile as you write the big fat cheque to him or her for their top notch advice.

Checking a little more carefully than we did, could save you one of these


Keith
 

brentdavies

Inspired Forum Member
Registered
Aug 31, 2007
570
2
16
64
Edmonton, Alberta
#4
Hi,

When I purchased our family farm in 1998, we obtained an GST number, so the purchase transaction was no GST owing at the purchase. We farmed the land for 9 years, and the Gst was a refund, as most commodities such as livestock and grain are zero rated for gst, but your gas and other supplies are gst applicable. So we payed more in gst on purchases than we sold with gst, so we got an refund at the end of the year.

The sale of the farm, we put in the lisiting information, GST was applicable. Please note that most real estate forms have the gst is included in the sales price, and you want it NOT included.
The purchasers orginally said they would pay the GST, but at the last minute, they became GST Registrates, and gave us a certificate for GST. So no CASH owing for the sale.

End result, GST is not an issue for the purchase and sale of a farm if handled properly.

Hope this helps.

Brent
 

chargerharry

Inspired Forum Member
REIN Member
Aug 30, 2007
130
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57
Calgary, Ab
#5
Check with your accountant, Randy. When I bought 4 quarters in 2005, I had an affidavit of no GST payable (or something to that effect). When I sold a quarter, the buyer provided me with the same affidavit. So no GST triggerred. Your accountant can set this up in 5 minutes. Good luck.
Harry
 

RandyDalton

Inspired Forum Member
REIN Member
Apr 21, 2008
159
3
18
59
Hamilton, Ontario
#6
Thank you all for your assistance and advice. I am new to this and getting my feet wet up to my armpits is an understatement.

Anybody able to recommend a good accountant in the Hamilton or St. Catherines area?

Anybody able to recommend a good lawyer in the same areas?

Regards...Randy Dalton