How Much Land Can a Non-Resident Own in Prince Edward Island?

Prince Edward Island limits how much land people who do not live in the province can own. If you are looking at a cottage lot, a waterfront property or a larger parcel, you need to know where the line sits before you make an offer.

This article explains the acre and shore frontage limits in the Lands Protection Act, who they apply to, and how to approach a purchase that might go over them. Because counting existing holdings can be technical, a lawyer should review your situation before you commit.

This article covers the law of Prince Edward Island.

The two limits

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 permission of the Lieutenant Governor in Council.

Either limit can trigger the requirement. A property under 5 acres can still be a problem if its shore frontage is over 165 feet, and a modest stretch of shore does not help if the total acreage is over 5.

It is an aggregate, not a per-lot test

The Act speaks of an aggregate land holding. That means the question is not only how big the parcel you want to buy is. It is how much land you would hold in total once the purchase is done.

So if you already own land in the province, that land can matter. How existing holdings are counted, including land held jointly or through other owners, depends on the facts and the current rules, and a lawyer can confirm it for you before you sign.

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 resident corporations also need approval above them.

If you are thinking about holding land through a corporation, whether the corporation is local or not, ask a lawyer how the Act treats it before you set anything up.

Going over the limit

If a purchase would take you above either limit, the Act requires permission of the Lieutenant Governor in Council. The detailed application steps, timelines and conditions are not something to guess at, so have a lawyer explain the current process.

• Do not assume a conditional offer will fix the problem on its own.
• Ask whether the purchase agreement should be conditional on approval being obtained.
• Find out early whether you count as a resident person under the Act, since that decides whether the limits apply to you.
• Remember that foreign buyers may face separate federal rules, which a lawyer can check for you.

Transfer tax is a separate cost of buying

The land limits are separate from tax. Whether or not you need approval, a purchase can carry Real Property Transfer Tax, which 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 is the value taken from the current assessment roll at that time.

The low-cost exemption applies only if both the price and the assessed value are $30,000 or less. The province lists it as an official, named exemption.

For the first-time buyer exemption, the 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. 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 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. Forms are listed on a government forms page. Whether you qualify for any exemption depends on your situation, so it is worth confirming with a lawyer.

What to do next

• List all land you already own or hold in Prince Edward Island, including any shore frontage.
• Get the acreage and shore frontage of the property you want, from the listing and a survey or legal description.
• Add the new property to your existing holdings and compare the totals to 5 acres and 165 feet.
• Decide whether you or your buying corporation count as resident under the Act, with a lawyer's help.
• Speak with a lawyer before making an unconditional offer if you are near or over either limit.

A short review before you make an offer is usually far easier than trying to fix a problem after you have signed.

Frequently asked questions