How do I buy a farm in Ontario?

Anyone asking how to buy a farm in Ontario soon learns that the land is only part of the purchase. A farm is also a business, and several Ontario programs attach to the operator and the property in ways that do not move automatically at closing. This guide sticks to the questions that are specific to Ontario: how the farm tax rate is decided, which licences may apply to the products the farm sells, where farm lenders publish their financing information and how an income-support program is delivered here. It is written for a buyer who has already decided to look at farms and wants to know what to verify before making an offer.

The farm tax rate does not simply carry over

Ontario’s farm property class tax rate program is administered through Agricorp. The province’s page says eligibility requirements include that the Municipal Property Assessment Corporation, known as MPAC, has assessed the property as farmland, that the property is used for a farm business, and that the farm business on the property has a valid Farm Business Registration number. It says farm properties that do not qualify are taxed at the residential rate. It also says that if you recently purchased farmland or had a change to the farmland ownership, you should visit the Agricorp website to find out whether you are eligible and how to apply or reapply. Ask the seller for the property’s current assessment and tax bills, and speak with Agricorp before you rely on the seller’s tax figure.

Check the registration behind the property

Because the program points to a valid Farm Business Registration number, find out whose registration is on the property now and whether it will be yours. If you are buying the land but will farm it through a different entity, or lease it to an operator, confirm with Agricorp which farm business would hold the number. Keep the answer in writing and make the purchase agreement conditional on it if the tax treatment matters to the price you have in mind.

Regulated products may need a marketing licence

The Ontario Farm Products Marketing Commission publishes information on which regulated farm products may require a licence from the commission and how to apply. Whether this affects you depends on what the farm produces or processes. Ask the seller which products the farm sells, through which channels, and whether any licence or quota-type arrangement exists. Then check the commission’s information yourself rather than relying on what the farm has done in the past, since a licence held by the seller may not be one you automatically hold.

Financing and income support

Farm Credit Canada publishes information on land and building financing and on farm transition on its agriculture financing page. Treat that as a place to start a conversation with a lender, not as an indication of what you would be offered. AgriStability, the income-support program, is delivered provincially in Ontario, among other provinces. Its page says producers must enrol each year, pay a fee and submit a form by the applicable deadlines, so ask the seller how the farm has participated and check with the program about how a change of ownership affects enrolment. Ask for the seller’s program records as part of due diligence, and keep your own written note of what the program tells you, with the date and the name of the person you spoke to.

Why the registration and the land are separate questions

The farm tax program’s requirements include two different things: how MPAC has assessed the land, and whether a farm business with a valid registration number operates on it. The second depends on who will farm the land after you buy it. A seller’s statement that the property qualifies today is a statement about the seller’s situation. Ask Agricorp, as the province’s page directs, about your own, and read the broader farm business guide for the business side of the purchase.

Financing questions specific to land

When you speak to a lender, ask what it will lend against the land and buildings and what it requires for the operating side of the farm. Ask what documents it needs from the seller, such as financial statements and the tax assessment history. The financing guide goes further on structuring. Keep any offer conditional on your financing and on the tax and licence confirmations, so that an unfavourable answer from any of them does not leave you committed to the land.

What to do before making an offer

• Get the property’s MPAC assessment class and the registration number in use, and confirm with Agricorp how a purchase affects the farm tax rate.
• List every product the farm sells and check whether any is a regulated farm product that may need a commission licence.
• Ask a lender for its written land and building financing requirements before you finalise a price.
• Ask how the farm has used AgriStability and what enrolment steps and deadlines would apply to you as the new operator.