Selling farmland can be a complex process, especially when it comes to HST implications. Here's what you need to know about when HST applies to farmland sales:
Principal Residence on Farmland
When selling farmland with a principal residence, the transaction is treated as two separate sales for HST purposes:
The sale of the principal residence is NOT subject to HST.
The sale of the remaining acreage COULD be subject to HST.
Hobby Farms
If you've been operating a hobby farm on the remaining land and decide to sell, there's good news:
NO HST is chargeable on the portion of land not related to the house if it was used as a hobby farm.
Leased Farmland
However, if you've been leasing the land to a third party for farming:
The sale of the land WOULD be subject to HST, as leasing is considered a business activity, not personal use.
Understanding these distinctions can help you navigate the HST implications when selling your farmland. Always consult with a tax professional for advice specific to your situation.
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