Investing in Farmland

Tax Advantages

One thing is certain
Whether you plan to leave farmland to your children or start a joint venture farming business.

At the end of the day, you want to make money!

That is why it is important to take advantage of all available tax benefits.


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Farmland Investing

It is a good idea to form a partnership with someone to work on the farmland. Almost everything is lower for corporations than for individuals, especially if they qualify for the small business deduction. However, if you decide to remove your money from the corporation, you will have to pay additional personal tax.

On the other hand , If you decide to purchase farmland you will have a few questions:

  • Is it a good price?
  • Is it a right time for me to do it?
  • Should I keep it on my name or to share with my spouse?
  • Is it good for my long-term  farming strategy?

These and many other questions and concerns will arise, which is completely normal because farming is more than just a business; it is a way of life. 

That is why we are here for you; we are an experienced group of investing consultants with extensive knowledge in farm investing and maximizing tax breaks. 

Tax Advantages For Farmland Owners?

Tax Implications

When the time comes to pass farmland on to the next generation, you must consider all possible methods to minimize your tax. That is why it is critical to talk with a tax advisor or other professional before making this decision, as some planning is required. 

Farmland can be transferred from parents to children in a variety of ways.

It can be done through individual will and it will be transferred upon death without immediate taxation; however, this can be problematic because it creates uncertainty and requires successors to be prepared. 

The farming asset can be transferred as a gift, releasing you from taxation; the disadvantage is that non-farming assets may be taxable. 

Selling to family members for less than fair market value is also an option, and all taxes will be calculated. 

Capital Gain


Capital gain is the difference between what you paid for farmland and what you received when you sold it for a profit.

The capital gains exemption motivates both parties to sell as near to fair market value as possible. This gives tax-free revenues to the parents while providing the child with an asset with a higher adjusted cost base. 




50% of capital gain is tax-free, and the other half is subject to a regular tax. This portion called the taxable capital gain is added to all other income in the year the gain occurs. Any allowed capital losses can be deducted from the taxable capital gain. 

Individuals can claim a $1,000,000 lifetime capital gains exemption on the sale of eligible farm property. The qualified agricultural property includes farmland and buildings, shares in a family farm corporation, and a partnership interest in a family farm. 

Capital gains can be divided among spouses. If both spouses contributed to the purchase of a home, the gains can be shared to decrease taxes. If the property is owned by a spousal partnership, the capital gains will be distributed to each partner in accordance with their percentage ownership. 

Potential Solutions

Farmers can defer tax on the transfer of farming assets to a spouse or child under the Income Tax Act. The rollover gives you a lot of leeway in deciding on a suitable transfer value because you can choose any amount between zero and fair market value.

There are a few factors that must be considered. 

  • The eligible property may be owned solely or jointly. 
  • Farmland assets can be transferred first to a spouse and then to a child. 
  • The transfer can take place while the taxpayer is alive or at a time of death. 

FAQs about Farmland Investing - Tax Advantages

What are the tax benefits of owning a farm?

For starters, because farming is a business, farmers can deduct all normal business expenses from their business income, including business-use-of-home expenses if they used their farmhouse for business purposes.

However, because farming is a unique business, farmers can claim deductions that other businesses cannot, such as fertiliser and lime costs, veterinary, medicine, and breeding fees, and fence repairs. Interest on loans and the amount of Crop Insurance Program deductible premiums are also claimable.

Is farming tax free in Canada?

Agriculture and agri-food businesses in Canada are subject to a mix of federal and provincial income taxes, sales and excise taxes, and provincial and municipal property taxes. Tax rates, exemptions, and deductions for agricultural land vary by province.

What can a farm write off on taxes?

Farmers commonly deduct expenses such as the cost of livestock and feed, seeds, fertiliser, wages paid to employees, interest paid on farm-related loans during the year, depreciation to recover a portion of equipment costs, utilities, and insurance premiums.

What is most profitable on a farm?

In 2021, apiculture will be one of the most profitable agricultural business ideas. Commercial beekeeping farms have sprung up all over the world in response to increased demand for honey and its byproducts, as well as a scarcity of natural honey.