Worked Examples and Checklists
How much will I get from selling my house? A worked net proceeds example
Step-by-step calculation of a Canadian seller's net proceeds, from sale price through commission, HST, legal fees, mortgage payout and adjustments, with the arithmetic shown.
To work out what you will receive from selling a home in Canada, start with the sale price, subtract commission and the GST or HST on it, legal fees, staging and repairs, then subtract the full mortgage payout (balance, any prepayment charge and discharge fee), and finally add or subtract the property tax and utility adjustments. The result is the cheque or transfer from your lawyer or notary. The worked example below takes a $900,000 house in Hamilton, Ontario, through every step. All figures are illustrative.
This example belongs to the closing costs checklist group. For the background on commission, see how realtor commission works.
The starting facts
- Sale price: $900,000, firm, closing in 60 days
- Commission: 4% total (listing and buyer side together), plus 13% HST
- Deposit paid by the buyer: $45,000, held in the listing brokerage's trust account
- Mortgage balance on the closing date: $410,000
- Five-year fixed term with two years left; the seller is not porting the mortgage
- Annual property tax: $6,000, paid in full for the year by the seller
- Closing date: 1 September
Step 1: commission and HST
Commission = $900,000 x 4% = $36,000 HST = $36,000 x 13% = $4,680 Total = $40,680
In the commission calculator, enter $900,000 and 4.52% (4% x 1.13). If your agreement is tiered or a flat fee, calculate the dollar amount and enter it as a flat fee with a 0% rate.
How it is paid: the brokerage keeps the $45,000 deposit, deducts $40,680, and sends the excess of $4,320 to your lawyer. You do not write a cheque.
Step 2: other selling costs
| Item | Amount |
|---|---|
| Lawyer's fee for the sale, including discharge registration (quote) | $1,200 |
| Disbursements and HST on legal fees | $300 |
| Pre-sale painting, minor repairs, cleaning | $3,500 |
| Staging (two months) | $2,800 |
| Total | $7,800 |
Step 3: mortgage payout
Ask your lender for a payout statement to the closing date. It will show:
| Item | Amount |
|---|---|
| Principal balance | $410,000 |
| Interest accrued to closing | $1,050 |
| Prepayment charge for breaking the fixed term early | $8,200 |
| Discharge or administration fee | $350 |
| Total payout | $419,600 |
The prepayment charge depends on your contract and the lender's calculation, and it can be the second-largest selling cost. If you are buying another home, ask whether you can port the mortgage instead; that is a mortgage question beyond the scope of this site, so speak to your lender or broker before agreeing to a closing date.
Step 4: adjustments
You paid the whole year's property tax ($6,000). From 1 September to 31 December the buyer owns the house for 122 days, so the buyer owes you:
$6,000 x 122 / 365 = $2,005.48 (credited to the seller)
Utilities are usually read on closing day and billed separately. If you had a rental water heater, the contract usually transfers to the buyer; if you had bought a furnace on a financing plan registered on title, it may need to be paid off.
Step 5: put it together
| Line | Amount |
|---|---|
| Sale price | $900,000.00 |
| Less commission and HST | -$40,680.00 |
| Less legal fees and disbursements | -$1,500.00 |
| Less painting, repairs, staging | -$6,300.00 |
| Less mortgage payout | -$419,600.00 |
| Plus property tax adjustment | +$2,005.48 |
| Net to the seller | $433,925.48 |
Selling costs other than the mortgage are $48,480, or about 5.4% of the price. Of that, the commission and HST are 84%.
Painting and staging were paid before closing out of the seller's pocket; the lawyer's net cheque will therefore be $433,925.48 + $6,300 = $440,225.48, from which the seller has already spent $6,300.
How the result changes
| Change | Effect on net proceeds |
|---|---|
| Commission 3.5% instead of 4% | +$5,085 ($4,500 + HST) |
| Wait two years to sell, no prepayment charge | +$8,200 (but other things change) |
| Skip staging | +$2,800, but it may affect price |
| Selling in Alberta (5% GST instead of 13% HST on commission) | +$2,880 |
| Non-resident seller without a section 116 certificate | 25% of the price withheld by the buyer until the CRA issues it |
Taxes after the sale
If the house was your principal residence for every year you owned it, the gain is normally exempt, but you must still report the sale on your income tax return. If it was a rental, or you owned it for less than 12 months, see tax on selling a home.
Frequently asked questions
When do I receive the money?
On closing day, once the transfer is registered and the buyer's funds are released, your lawyer pays out the mortgage and sends you the balance, usually the same day or the next business day.
Is the commission calculated on the price before or after adjustments?
On the sale price in the agreement. Adjustments for taxes and utilities do not change the commission.
Can I deduct selling costs for tax?
On a principal residence the gain is usually exempt, so there is nothing to deduct from. On other property, commission and legal fees reduce the capital gain.
Why is my lawyer holding back some money?
A lawyer may hold funds to cover a lien, an unpaid utility bill, or the 25% withholding for a non-resident seller until the CRA certificate arrives.
Sources
- Financial Consumer Agency of Canada — prepayment charges and mortgage discharge
- Canada Revenue Agency — principal residence reporting and section 116
- Real Estate Council of Ontario — listing agreements and commission
- Law Society of Ontario — find a real estate lawyer
