{"id":279180,"date":"2023-03-17T13:39:08","date_gmt":"2023-03-17T13:39:08","guid":{"rendered":"https:\/\/wahi.com\/ca\/en\/?p=279180"},"modified":"2025-11-17T11:25:52","modified_gmt":"2025-11-17T16:25:52","slug":"hst-on-vacant-land-sales","status":"publish","type":"post","link":"https:\/\/wahi.com\/ca\/en\/learning-centre\/real-estate-101\/sell\/hst-vacant-land-sales\/","title":{"rendered":"HST on Vacant Land Sales"},"content":{"rendered":"

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Depending on if the vacant land was used for business purposes or by an individual for personal use can affect HST after a sale. Learn more about this here!
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By Emily Southey<\/a> | 6 minute read<\/p>\n

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There are multiple types of land available for sale in Ontario<\/a>. The three most common types are raw land, vacant land, and zoned land. Vacant land is land that is serviced or partially serviced, meaning it likely already has certain utilities on the premises, though they may be limited. Such utilities may include water, electricity, septic, road services, or even pre-existing developments (though it is unlikely to contain any permanent structure). Lastly, vacant land is privately owned. In contrast, raw land is land that has never been developed and therefore has no pre-existing developments, structures, or utilities. Meanwhile, zoned land is land that has already been designated for a specific use (for example, commercial, industrial, agricultural, residential, and more). Any time you buy a plot of land in Ontario, you must check the zoning laws to ensure you can use the vacant land the way you wish to.\u00a0<\/span><\/p>\n

–<\/span><\/p>\n

HST on the Sale of Vacant Land in Ontario<\/strong><\/h2>\n

Selling vacant land in Ontario can be tricky, largely due to the tax implications of doing so. For example, many factors are used to determine whether HST is applicable to the sale of vacant land. Therefore, understanding what these factors are and the circumstances in which you will need to pay HST is important.\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n

Ultimately, vacant land sales can either be subject to or exempt from HST under the Excise Tax Act of Canada. This Act details the conditions in which HST is applicable to sales of vacant land and the requirements that the land must meet to be exempt from HST. For example, the sale of your vacant land may be subject to HST if it falls into one of the following categories:\u00a0<\/span><\/p>\n

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  • The vacant land was used primarily for business purposes, where the owner had a reasonable expectation of profit. (Please note that the sale of the land does not need to be the source of the profit for the business; the land just needs to have been primarily used by the business.);<\/span><\/li>\n
  • The sale of the vacant land was finalized in the course of a business of the owner.\u00a0 Factors that may be considered include how often the owner is involved in these types of sales and the amount of time and effort put toward activities related to the sale of the vacant land; and<\/span><\/li>\n
  • The vacant land was created by the owner by subdividing one parcel into more than two parts (excluding any parts given to an authority with the right to expropriate).<\/span><\/li>\n<\/ul>\n

    In contrast, the sale of your vacant land might be exempt from HST if it meets any of the following qualifications:<\/span><\/p>\n

      \n
    • The vacant land was primarily used for personal use by the owner;<\/span><\/li>\n
    • The vacant land was an adventure or concern in the nature of trade by the owner (that is, when an owner had a primary or secondary intention to resell the land at a profit at the time of purchase, but does not regularly engage in such activities as a business and did not dedicate a significant amount of time and effort to activities related to selling the land or preparing it for sale); and<\/span><\/li>\n
    • The owner subdivided a parcel of land into no more than two parts or, where the owner subdivided a parcel into more than two parts, it was for a transaction where the owner was selling a part to a relative for personal use.<\/span>\u00a0<\/li>\n<\/ul>\n

      –<\/span><\/span><\/p>\n

      <\/h3>\n

      <\/span>HST Reporting on Vacant Land Sale<\/strong><\/h3>\n

      It is important to note that the burden of collecting and remitting HST on the sale of vacant land is the responsibility of the seller (unless the buyer is an HST registrant). If the buyer is a registrant, they must self-assess the tax and remit the HST owing to the Canada Revenue Agency (CRA) via their HST return. However, even in this scenario, it is still the seller\u2019s responsibility to ensure that the buyer is a registrant and that their HST number is valid before allowing them to self-assess and remit HST to the CRA. Therefore, a seller must obtain a valid HST number from the buyer. If they fail to do so and the buyer\u2019s number turns out to be invalid, the seller may be held liable for HST remittance under the Excise Tax Act. \u00a0<\/span><\/p>\n

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