Home Selling Costs
Here is a list of some typical costs associated with a home sale. Depending on your situation, there may be other expenses and the amounts may differ. As a rough guideline, expect your home selling costs to be about 5% of your home's value.
Real estate agent’s commission/fee
The agent's commission or fee covers all services provided by your real estate agent and usually includes all marketing costs. The commission is split with the buyer’s agent — so you’re paying both. You will also have to pay a GST of 5% on the agent's commission or fee.
- typical: 7% on the first $100,000 and 2.5% on the balance of the sale price
Repairs and renovations
Even though major pre-sale renovations are not recommended, you may still have to make some home improvements — either to keep in line with the neighbourhood standards, or to replace something completely outdated. You should also do minor repairs to fix the most obvious problems — too many issues left unfixed may make your home unsellable. Check what renovations make the best pre-sale investment. Depending on your situation, renovation costs will vary considerably.
you can consult Repair Cost Guide from Pillar To Post home inspection company
A relatively new idea in real estate is hiring professional "stagers" who redecorate your house to appeal to a wider range of buyers. Home staging can be a good option for a vacant home. Most staging companies offer a full range of services, ranging from a quick rearranging of furniture to a total makeover with rented furniture and accessories.
$150–$1000, depending on the size of the house and scope of services
There are two types of legal costs:
- Fees — You may need a lawyer or notary public to review the purchase offer and handle the closing of the transaction. Fees are what you pay for the lawyer's time and expertise.
- Disbursements — You will need to reimburse your lawyer for any out-of-pocket expenses paid for documents and services provided by third parties. For a seller, disbursement costs usually cover faxes, phone calls, mailing fees, and the like.
- fees: approximately $800–$1,200 for common transactions (plus 5% of GST)
- disbursements: about $250
Property tax adjustments
Generally, property taxes for the calendar year are paid at the beginning of July for the full year. If you sell your home before July 1st, you will be paying the buyer the portion of the property tax accrued from January 1st to the completion day. The buyer will then pay the entire amount to the municipality on July 1st.
Mortgage penalties and discharge fee
Depending on the details of your current mortgage agreement, you may have a few options if you sell your home before the end of your mortgage term:
- to take your mortgage with you to your new home
- to let the buyer assume it
- to pay it off early
If you have a closed mortgage, most lending institutions will charge you prepayment penalties and a discharge fee. The penalties are calculated as the greater amount of three months’ interest or the interest rate differential. The latter may be very high. Open mortgages can often be transferred or discharged with little or no fee.
- $75 for mortgage discharge fee
- prepayment penalties vary considerably
Capital gains tax
If you’re selling an investment property or a vacation cottage, you’ll need to pay a capital gains tax on 50% of the net profit you'll make from the property sale. This amount will be added to your total taxable income, and how much tax you'll pay will depend on your tax bracket in that year. If you're selling your principal residence, you are exempt.
50% of the gain is added to your taxable income
Don't forget to budget for moving services and packing supplies. Shop around carefully before choosing movers and equipment. Include the cost of keeping things in temporary storage, if necessary. You can save about 50% by renting and driving a moving truck yourself.
$350 and up
To attract more buyers, you can purchase a one-year home warranty for the buyer. Home warranties cover repairs on most major systems (heating, air-conditioning, electrical) and, optionally, appliances. A home warranty is especially valuable if you’re selling an older home — buyers may rest assured that should something go wrong, they won't be forced to spend a lot of money for repairs.
$300–$700 on average
Almost all of your selling costs (except for renovations, staging, and other optional expenses) can be tax deductible if:
- you are an employee relocating for a new job (or being transferred),
- your are self-employed and relocating for professional reasons, or
- you are moving to become a full-time post-secondary student.
Tax deductions also apply to:
- the cost of shipping and storing your belongings
- your personal travel costs, including up to 15 days of lodging and food
- legal fees and transfer taxes incurred on the purchase of your new home
The only catch is that your new home has to be at least 40 kilometres closer to your new place of business or study.
As with any tax breaks, there are some eligibility restrictions — check Canada Revenue Agency for details.
Legal costs do vary. When requesting a quote ask that it include fees, all disbursements (the cost of searches, registration fees, couriers, photocopies, faxes, land title agent's fees, etc.) and taxes (HST) to be charged.