Can a Non-Resident Buy Property in Prince Edward Island?

If you live outside Prince Edward Island, or outside Canada, and want a cottage, a shoreline lot or farmland, the first question is whether you are allowed to buy at all. The short answer is that the Island has rules that limit how much land non-residents can hold.

This article explains the main limits in the Lands Protection Act, who they apply to, and the practical steps to take. Whether you count as a resident, and what approval you need, depends on your facts, so a lawyer should confirm your position before you commit to a purchase.

This article covers the law of Prince Edward Island.

The basic rule in the Lands Protection Act

Under section 4 of the Lands Protection Act, a person who is not a resident person shall not have an aggregate land holding over 5 acres, or shore frontage over 165 feet, without the permission of the Lieutenant Governor in Council.

This means a non-resident is not simply barred from owning Island land. The rule sets limits. A smaller property, such as a modest lot under both thresholds, is not caught by the permission requirement in that section, while a larger property or a long stretch of shoreline is.

Understanding the two thresholds

Either measure can trigger the need for permission. A property under 5 acres can still be caught if it has more than 165 feet of shore frontage. The word aggregate matters too. It refers to your total land holding, not just the parcel you are buying now.

If you already own land on the Island, add it to the new parcel before deciding whether you are under the limits.

Corporations are covered too

Buying through a company does not avoid the limits. Under section 5, a corporation is subject to the same 5 acre and 165 foot limits, so even resident corporations need approval above them.

If you are thinking of using a corporation to hold land, speak with a lawyer first. How the Act treats ownership structures, and who counts as a resident person, depends on the details.

When approval is needed and who gives it

Approval is needed when your holding would go over 5 acres or 165 feet of shore frontage and you are not a resident person. For a corporation, approval is needed above the same limits. The permission comes from the Lieutenant Governor in Council.

• Under both limits: the permission requirement in section 4 does not apply to the holding.
• Over either limit as a non-resident: permission is required.
• Corporation over either limit: approval is required.

The application process, the information you need to provide and the timing are details a lawyer can explain for your situation. Other laws may also apply depending on your citizenship, so ask about that as well.

Transfer tax on your purchase

Apart from the land limits, buying property in Prince Edward Island involves Real Property Transfer Tax. The tax is 1% of the greater of the purchase price and the assessed value of the property. The buyer pays on whichever is higher, the price or the assessed value at the time the deed is registered. Assessed value means the value taken from the current assessment roll at the time the deed is registered.

There are exceptions, and each has conditions:

• Low-cost property: no transfer tax is payable where the greater of the price and the assessed value does not exceed $30,000, so a home is exempt only if both are $30,000 or less. The province calls this the Low-Cost Real Property Exemption.
• First-time home buyers: the tax is waived for a first-time home buyer who meets the criteria in the Act, and all purchasers must qualify as first-time home buyers.
• A first-time buyer must be a Canadian citizen or permanent resident, must not have used the exemption before, and must meet the Act's PEI residency test.
• To claim it, the buyer completes the Declaration – First-time Home Buyers form, signed before a notary public or a commissioner for taking affidavits.
• A first-time buyer who does not live in the home as a principal residence for 183 consecutive days after registration must pay the tax that would have been payable at registration.

A first-time buyer who pays the tax at registration because the residency test was not yet met may apply for a refund after occupying the property as a principal residence for at least 183 days following the deed date, using the Request for Refund of Real Property Transfer Tax plus the notarized declaration. The forms are listed on a government forms page. Whether you meet these tests depends on your situation, so it is worth confirming with a lawyer.

What to do next

• List all land you already own on the Island, since the limit applies to your total holding.
• Find out the acreage and the shore frontage of the property you want to buy.
• Check whether you or your corporation would end up over 5 acres or 165 feet.
• Talk to a lawyer about whether you count as a resident person before you make an offer.
• If approval may be needed, ask your lawyer how to make your agreement of purchase and sale conditional on it.
• Ask your lawyer to explain which transfer tax rules and exemptions may apply to you.
• Do not waive conditions or pay a large deposit until you know whether permission is required.

Frequently asked questions