Buying Land in Canada: Land Loans, Checks, Costs and Province Rules

You can borrow to buy land in Canada, but not the way you borrow for a house. CMHC’s insured construction financing doesn’t advance money on vacant land. The options are a land loan with a larger down payment, equity from a home you already own, or financing from the seller. Farm Credit Canada, which lends on farmland, says a land loan typically needs a down payment of 25% of the price. The checks to make on the land itself, and the rules in your province, are set out below.

Jump to your province: Ontario, British Columbia, Alberta, Quebec, or the other provinces. Building on the land after you buy is covered in construction loans in Canada.

Can you get a mortgage for land?

Yes, but expect to put more of your own money in. CMHC’s mortgage insurance program for improvements and construction states that it doesn’t advance loans on vacant land. Ways to pay for land:

• A land loan from a bank or credit union, on the lender’s own terms. For farmland, Farm Credit Canada describes a typical down payment of 25% of the purchase price, and says it is common to pledge other land as security instead.
• Borrowing against a home you already own. The Financial Consumer Agency of Canada says you may borrow up to 65% of your home’s value on a HELOC; our guide to HELOCs explains how the limit works with a mortgage.
• A construction mortgage that starts once you own the lot. For an owner-built home with CMHC-insured financing, the borrower has to hold title to the land by the first advance, and CMHC has to approve the financing before construction starts or at an early stage. In practice that means buying the land first with one of the other options. Draws, budgets and lenders are on the construction loans page.
• Seller financing, where the seller lends you part of the price: see vendor take-back financing below.

Ask the lender at the start whether it finances the kind of land you are looking at, and how much it would lend.

What to check before you make an offer

Make your offer conditional on the checks you need time for. The province sections below add each province’s own rules.

What buying land costs, and GST/HST

For a price, look at what similar lots nearby have sold for. On top of the price:

• Land transfer tax. Rates and fees by province are on the land transfer tax calculator.
• Legal fees, a survey and tests. Budget for a lawyer’s title search and registration and, depending on the lot, a survey, a percolation test for a septic design and a well test.
• Property tax. Ask the seller for a copy of the property tax bill.

GST/HST. The CRA says most sales of vacant land by individuals are exempt. A sale is taxable when, for example, the land was capital property used mainly in a business, the sale is made in the course of a business, or the lot was created by subdividing a parcel into more than two parts. An individual who has never subdivided the land before and splits it into just two parts can sell either part exempt. So a lot sold in the course of a business is taxable, while most sales of vacant land by individuals aren’t. Ask the seller to state the GST/HST status in the agreement. GST/HST rates by province are in our sales tax section.

Rules that differ by province

Buyers who aren’t Canadian citizens or permanent residents. CMHC says that since March 27, 2023 the federal ban on non-Canadians buying residential property doesn’t apply to vacant land. It also exempts residential property outside a census metropolitan area or census agglomeration, and allows purchases for development. Details are on the foreign buyer ban page. Several provinces have their own limits on who can own farmland or rural land, set out below.

Ontario

In Ontario the municipality’s zoning bylaw controls how land can be used, and it decides whether you can build. Creating a new lot from a larger property is a land severance, which has to be authorized; the approval can be delegated to a land division committee or a committee of adjustment. Development in regulated areas such as floodplains, shorelines, wetlands and watercourses needs a permit from the local conservation authority, and installing a septic system needs a building permit. In the Greater Golden Horseshoe, the Greenbelt Plan protects farmland and natural areas.

British Columbia

About 4.9% of BC’s land base is in the Agricultural Land Reserve, a provincial zone where farming is the priority use and non-farm uses are regulated. Most subdivisions of ALR land need the Agricultural Land Commission’s approval, and a non-farm use can be approved only if it is a permitted one. Check whether a rural lot is in the ALR before you plan a house on it. Some lots are in bare land strata corporations, where owners own their individual lots and together own the common property as a strata corporation. Most of BC is Crown land (94% provincial Crown land), and applications to use it go through FrontCounter BC.

Alberta

Alberta has no land transfer tax. Instead, registering a transfer of land costs $50 plus $5.00 per $5000 of value. Every municipality has to pass a land use bylaw, and, except as that bylaw provides, you need a development permit before you start any development; private sewage work falls under the Safety Codes Act, which requires permits before constructing, issued by accredited municipalities or agencies. The Crown owns most mineral rights, and an operator developing subsurface resources may be granted a right of entry to private land through the Land and Property Rights Tribunal.

Foreign citizens and foreign-controlled corporations can own up to 2 parcels of controlled land totalling no more than 20 acres, while Canadian citizens and permanent residents aren’t affected. Land inside a city, town, village or summer village isn’t covered by these rules. Acquiring an interest in controlled land also requires a disclosure from every buyer, Canadians included.

Quebec

In Quebec’s agricultural zone, you generally can’t subdivide, sell or use a lot for a purpose other than agriculture without the authorization of the Commission de protection du territoire agricole (CPTAQ). So check the zoning of a rural lot before you plan a house on it. The new owner of a property pays the transfer duty (the “welcome tax”) to the municipality.

Other provinces and territories

• Saskatchewan: people who aren’t Canadian citizens or permanent residents, and entities owned or controlled by non-Canadians, need an exemption from the Farm Land Security Board to hold an interest in more than 10 acres of farmland.
• Manitoba: foreign interest in farmland is limited to 40 acres; a non-Canadian can apply to the Manitoba Farm Industry Board for an exemption.
• Prince Edward Island: Under PEI's Lands Protection Act, a non-resident person or a corporation must apply to the Island Regulatory and Appeals Commission (IRAC) for approval before holding more than 5 acres of land or more than 165 feet of shore frontage in total. A resident is a Canadian citizen or permanent resident who has lived in PEI for at least 365 days in the 24 months before acquiring the land and files their tax return in PEI.
• Other Atlantic provinces: for transfer taxes and fees in Nova Scotia, NB and Newfoundland and Labrador, see the land transfer tax calculator for transfer taxes and fees.

Farmland and Crown land

For farmland, see the ownership and use rules in the province sections above, and Farm Credit Canada’s land loans in the financing section.

Some provinces will consider selling Crown land. Ontario’s Crown land is 87% of the province, and individuals can request to buy or rent it, but Ontario doesn’t consider applications for new homes, cottages or other private recreational use, and the process can take several years. In Saskatchewan, holders of a long-term agricultural lease can apply to buy some or all of the Crown land they lease, and its sales policy for agricultural Crown land is to sell saleable land to Canadian citizens or permanent residents. In Newfoundland and Labrador, there is no complete list of Crown land in the province, and Crown land is administered by the Department of Fisheries, Forestry and Agriculture.

Vendor take-back financing

In a vendor take-back (VTB), the buyer and seller sign a loan agreement, usually a promissory note plus a charge registered against the land, and most often the loan covers the gap between what a lender will advance and the agreed price. The seller receives that part of the price over a number of years instead of at the sale.

Put the terms in writing:

• the amount, rate, payment schedule and the date the balance is due;
• whether the buyer can prepay, and on what terms;
• how a default is defined and what the seller may do about it;
• whether the buyer can sell the land, or add a construction mortgage, while the VTB is outstanding.

For the buyer, work out in advance how to pay off the balance at maturity. Ask your construction lender early how it handles a VTB on title. For the seller, the risk is that the buyer stops paying; the CRA’s capital gains guide covers a mortgage holder who has to repossess the property because the amount owed wasn’t paid.

Tax for the seller. When you receive the price over several years, the CRA usually lets you claim a capital gains reserve, reporting part of the gain as the proceeds come in; most reserves run up to four years, so the total gain is taxed over five years. Interest the buyer pays you is income to report each year as it is earned.

Taxes when you hold or sell land

Whether the CRA treats the gain on land you sell as a capital gain or as business income depends on the specific details of the situation. A home’s principal residence exemption can cover the land it sits on, usually up to half a hectare (1.24 acres), or more if you can show you need it to use and enjoy the home. If you buy land one year and build later, the property can’t be designated as your principal residence for the years before you, your spouse or common-law partner, or your child start to live in the house. More on the principal residence exemption. For farmland, see the lifetime capital gains exemption page ($1,275,000 in 2026).