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. Click on each topic for more details or 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:
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.
Donating your farmland is an important decision, so please contact us to ask any questions you may have about whether this is the right choice for you.