Acquiring Land on Prince Edward Island When it comes to acquiring Prince Edward Island real estate, there is actually very little difference whether you are an islander or not. Most of the differences will be based upon whether the acquisition is ocean or river frontage. - Individuals who are looking to purchase more than 165 ft of frontage on a body of water, or a piece of land which is greater then 5 acres, are required to apply to the Prince Edward Island Regulatory and Appeals Commission (IRAC) for approval.
- When there are multiple names on a deed, such as a husband and wife, the limit of 165 ft of frontage limit is doubled and the entitlement then becomes 330 ft or 10 acres.
Should the desired purchase exceed the non-restrictive acquisition limit, a process must be followed to allow ownership of that property. At this point a lawyer must appeal to the Commission, which has the authority to grant approval for such acquisitions. Most PEI real estate agents would place a condition in the offer contract which would state “pending IRAC approval by [a set date]”. This ensures a refund of any deposit on the desired property if approval is denied. However, the chance of approval is very good. The Commission’s role is primarily to safeguard the Island water front property. The goal is to ensure that development is environmentally conscious, and to prevent the division of large parcels of land into unmanageably smaller lots. The Real Property Transfer Tax Act This Act states that anyone who registers a deed in Prince Edward Island must pay a tax of 1% of the sale price or the assessed value of the real property, whichever is greater, before the deed can be registered. However, there are some exemptions. One is the Low-cost Real Property Exemption. No tax is owed on the transfer of real property if the purchaser’s affidavit indicates neither the sale price, nor the assessed value of the real property, exceeds $30,000. Another is the First-time Home Buyer Exemption. No tax is owed on the registration of a deed of conveyance if the person is a First-time Home Buyer and meets all of the following criteria: - the individual(s) must occupy the real property as their principal residence, and
- the greater of the purchase price or the assessed value of the real property does not exceed $200,000, and
- if there is more than one purchaser, all the purchasers of the real property must qualify as first-time home buyers, and
- the qualified individual(s) must fill out the Declaration - First-time Home Buyers form at the time of registration.
Inter-family Transfers are also exempted if recipient(s) are all members of the family of the person making the transfer, and the sale price does not exceed $1. "Family member" means the father, mother, spouse, common-law spouse, grandfather, grandmother, son, daughter, brother, sister, grandson, granddaughter, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, sister-in-law, step-father, step-mother, step-son, step-daughter, step-brother or step-sister of the person making the transfer. Also, a Declaration of Inter-family Transfer form must be submitted at the time of registration.
Additional exemptions are applicable in some situations such as certain estate transfers, certain mortgage transfers, certain trust/trustee transfers, certain corporate transfers, certain non-arms-length transactions, examples of which are such as Deeds of Correction, or to a non-profit organization, or transfers of property to the Crown. You can find more detailed information on all the exemptions in the Real Property Transfer Tax Act. |