Donating your farm to the Ontario Farmland Trust (OFT) is a viable option for farmland owners who want to support farmland protection in Ontario, ensure farming of agricultural lands into the future, and are prepared to transfer ownership of their land.
The following outlines the key things you should know about donating farmland to OFT. Scroll down for more information on the tax benefits and financial considerations. You can also download our Donations of Farmland fact sheet.
A Fee Simple Donation of Farmland
Is a straightforward land protection approach.
Land donations are a full transfer of ownership (title) of your property. Once the title is transferred to OFT, the land trust is then responsible for the care and maintenance of the property.
Can be done while living.
Adding life interest to the land donation ensures that you can remain living on the farm for the remainder of your life, as well as realize the tax benefits during your lifetime. OFT works closely with each farmland owner to ensure the donation meets your individual needs.
Can be included in your will.
Land can be donated as part of estate planning by having your lawyer include your wish for land donation in your will. Your estate and any named beneficiaries would realize the tax benefits from this approach. It is important to notify OFT of your intentions to donate your land, so we can include the stewardship of your farm in our long-term plans.
Can be done in conjunction with a Farmland Easement Agreement.
By completing an easement agreement in advance of donating your land, you are guaranteed that your land will be protected for agriculture, forever. Farmland Easement Agreements take time, so it is important to leave plenty of time to complete both the easement agreement and the land donation. For more information, visit our Farmland Easement Agreements web page or you can download our Easement-Fact-Sheet-WEB.
Tax Benefits and Financial Considerations
Farmland owners can receive tax benefits by donating their land to OFT. Such benefits are intended to make farmland preservation achievable and affordable for farmland owners who choose to make this part of their legacy.
Farmland owners, or their estate, are compensated with a charitable tax receipt from OFT for the fair market value of their property, as determined by a qualified appraiser.
In the case of a ‘life interest’ donation, the tax receipt will be for the assessed value of the farmland minus the ‘remainder’ interest.
If a Farmland Easement Agreement is registered on the farm in advance of the fee simple land donation, farmland owners are compensated with two charitable tax receipts from OFT. The first tax receipt will be received on completion of the easement, and will be for the difference between the property’s fair market value before the easement is in place, and the fair market value after the easement has been registered. Then, after the fee simple land donation has been completed and the property title transferred to OFT, a second tax receipt will be issued for the remaining fair market value of the property.
Also, if your farm includes significant natural features like a forest or wetland, your land donation could qualify for enhanced tax benefits through Environment and Climate Change Canada’s Ecological Gifts Program.
The timing of the land donation and, therefore, the triggering of tax advantages can be an important factor to consider. In many cases, the tax benefits can be significant. It is strongly recommended that farmland owners seek legal and financial advice to fully understand the financial impact of a land donation, and how to maximize the benefits for you and your family.
Questions?
If you are interested in protecting your farm with us, please fill out our Landowner Inquiry Form.
You can also contact us at any time with your questions or to further discuss protecting your farm.