Yes, any investor in the world can buy a PEI Real Estate property. In certain circumstances, when a non-resident of PEI is acquiring large acreage on PEI, the I.R.A.C. (Island Regulatory and Appeals Committee) may have to approve the purchase; however, in the vast majority of cases, approval is granted to the buyer. Every non-resident buying in PEI can purchase 5 acres and 165 feet on any waterfront property, and legally NOT have to go through the I.R.A.C. process. Two people can buy 10 acres and 330 feet water frontage, etc.
A non-resident person or corporation, or a resident corporation must make application if the person or corporation will have an aggregate land holding:
-in excess of 5 acres, or
-having a shore frontage in excess of 165 feet.
A non-resident person who acquires a land holding by gift, devise or inheritance from a spouse, sibling or direct descendent or ancestor is exempt from making application.
A person or corporation can hold an aggregate land holding of no more than:
-1,000 acres for a person; and
-3,000 acres for a corporation.
An application for a land purchase must include the following:
-a completed application form
-an orthophoto or GeoLinc map of the parcel(s) outlined in red;
-a legal description of the subject parcel;
-if the applicant is a non-resident person or corporation, details of recent advertising of the land on the local real estate market.
-a fee of $550 or 1% of the agreed purchase price, whichever is greater [for all applications by non-resident corporations or corporations where the majority of voting shares are owned by non-resident(s), and most non-residents].
Cheques should be made payable to the Island Regulatory and Appeals Commission and the completed application is submitted to the Island Regulatory and Appeals Commission.
Generally 3-4 weeks is required from the date an application is filed to the date a decision is rendered. However, depending on the complexity of the application, additional time may be required.
The Order confirming Government's decision is usually issued within one week to 10 days of the date of the decision and should be registered with the deed.
When an application is denied or is approved but no part of the purchase has been or will be completed, the Commission may refund up to 50% of the application fee upon application. An application must be made to the Commission within six months of the date of the decision and must include:
-a statutory declaration stating the grounds for the refund; and
-the original Order that granted or denied permission to acquire the land.
The issues involving land ownership and land use in Prince Edward Island began in the early history of the province. The Island was initially divided into sixty-seven 20,000-acre lots or townships. These lots were allocated in advance of settlement to a relatively small elite group of absentee proprietors. Over time, the land was purchased from the absentee landlords and returned to local ownership.
Issues associated with absentee landlords resurfaced again in the 1960's, as non-residents began investing in local real estate throughout the province. As a result, substantial amounts of land in the coastal areas fell out of the control of local residents. In 1972, Government introduced amendments to the Real Property Act to restrict the purchase of land by non-residents.
In 1981, an application by a non-resident corporation to acquire 6,000 acres prompted public concern over the perceived impacts of land ownership distribution and its implications for the future. Some viewed this as giving pre-eminent control of the province's agricultural industry to one company. This led to the introduction of Bill 37 - the Land Protection Act in 1982.
If you would like more information you can visit www.irac.pe.ca
Before any citizen of Prince Edward Island can get a building permit, there must be a successful Perk Test completed. This perk test is solely concerned with the type of soil a PEI property has in regards to a Septic System. The soil in a property should be such that there is good drainage in the septic field that is behind the Septic Tank area, or, in other words, a good Perk Test measures the ability of the soil to absorb liquid.
Unfortunately, not all soils can absorb wastewater or purify it. Sewage disposal systems that are installed in unsuitable soils usually malfunction by leaking raw, untreated sewage to the soil surface or a roadside ditch, or by contaminating the groundwater. The sewage may contain deadly bacteria and viruses. It is expensive to remedy the odour problems and potential health hazards that result from the use of sewage disposal systems in unsuitable soils, so it pays to investigate. (PEI Government website)
To do a Perk Test, a hole of about 4 feet is dug by a backhoe in the area of the property where the septic tank and septic field will be located. Then a Prince Edward Island government official will get into the hole and analyse the profile of the soil at different depths in the profile. The PEI government official knows by training what a good soil profile should look like. He or she then will make a decision as to whether the Perk Test is Category 1 soil (The best soil test), or Category 2 soil, or Category 3 soil, etc. Most properties in Prince Edward Island will be either Category 1 or Category 2 soil.
In conclusion, it is mandatory that a Perk Test be done on Prince Edward Island before a Building Permit will be issued by the PEI government. When buying Raw Land on PEI, it is imperative that a Perk Test be done on it by the Vendor or Purchaser before the closing date of the offer agreement to protect the Purchaser.
HST(14% on PEI) is to be paid on new residential builds, and most all raw land. A lived in residential home is exempt from HST. When doing a real estate transaction, there is only HST on the commission amount only which is normally paid by the vendor (seller). I always suggest talking to your lawyer to find out for sure what you qualify for.
The costs associated with purchasing a home, such as legal fees, disbursements and land transfer taxes, can be a particular burden for first-time homebuyers who must pay these costs, as well as save money for a down payment. To assist first-time homebuyers with the costs associated with the purchase of a home, the Government of Canada introduced a FTHB Tax Credit in 2009 - a $5,000 non-refundable income tax credit amount on a qualifying home acquired after January 27, 2009. For an eligible individual, the credit will provide up to $750 in federal tax relief starting in 2009.
PEI charges 50% more in property taxes to owners who are not permanent residents. In order to get the lower tax rate, one must reside in PEI for 183 days consecutively.
In Prince Edward Island, the land transfer tax is calculated using the greater between a home's purchase price and its assessed property value. The PEI land transfer tax rates are as follows:
-less than $30,000 - no land transfer tax paid
-$30,000 - $200,000 - 1% land tax credit paid (Full refund for first-time home buyers)
-greater than $200,000 - 1% land tax credit paid (no rebate available)
PEI land transfer tax example calculation
If you are purchasing a home for $200,000, which is assessed to be $220,000, your land transfer tax will be:
$220,000 assessed value 1% tax rate = $2200 land transfer tax
First-time home buyers are exempt from the land transfer tax if the purchase price of their property is $200,000 or less and if the property is occupied as a primary residence if they meet the following criteria:
The purchaser must be a Canadian citizen or permanent resident who has:
-lived in PEI for six months before the purchase of a home, or
-has filed income tax at least two times in the past six years.
If there are more than one purchaser, both purchasers must be first-time home buyers.