The selling price is not the amount that remains available after the transaction. An early budget helps estimate net proceeds and coordinate a future purchase more carefully.
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Key takeaways
- Budget : separate debt repayment, fees, taxes and transition costs.
- Confirmation : obtain amounts from your lender, contract and providers.
- Cash : available net proceeds are not taxable profit.
Your selling budget, item by item
Obtain amounts specific to your transaction before committing your next down payment. Clarify whether each estimate includes taxes and when payment is due.
| Item | What to obtain |
|---|---|
| Brokerage | Agreed remuneration, taxes and services included in the contract |
| Mortgage | Lender’s payout statement: principal, interest, penalty and applicable fees |
| Notary and discharge | Estimate of costs payable by you and closing adjustments |
| Certificate of location | Review of the existing document and a quote if a new one is required |
| Preparation | Quotes for cleaning, repairs, painting or selected expert assessments |
| Transition | Moving, storage and possible overlapping housing costs |
Amounts vary by property, contract and provider. This table does not establish any rates.
Preparation and marketing costs
Depending on the property’s condition, budget for cleaning, painting, maintenance, repairs or targeted expert assessments. A new certificate of location may also be needed if the existing document no longer reflects the property’s current condition.
Broker compensation and applicable taxes should be included in the calculation. Included services and terms are set out in the brokerage contract and should not be estimated from an assumed percentage.
Brokerage fees and taxes: distinguish the amounts
OACIQ does not set a brokerage fee rate. The amount and terms are agreed in the contract. Compare included services and any additional charges, then use your actual agreed amount in the budget.
GST of 5% and QST of 9.975% apply to taxable brokerage remuneration. In this calculation, they apply to the fee, not the home’s sale price. This does not determine the tax treatment of the property sale itself.
- Contract : verify the agreed amount or percentage and payment terms.
- Taxes : keep the before-tax fee and taxes on separate lines.
- Double counting : do not add a service again if it is already included.
The mortgage and notarial closing
Paying out a closed mortgage before the end of its term may trigger a penalty. Ask the lender for a current written amount, then verify whether porting the mortgage or another contractual option is available.
Discharge-related costs and adjustments for taxes, condo charges or rent can also change net proceeds. The notary confirms the amounts specific to the transaction.
Hypothetical example: a $600,000 sale
This example illustrates the method without suggesting a standard fee or providing a quote. It assumes a flat brokerage fee of $20,000 before taxes, a $300,000 mortgage payout and the other amounts below. Replace every assumption with your confirmed figures.
| Item | Amount |
|---|---|
| Selling price | $600,000 |
| Mortgage payout | − $300,000 |
| Brokerage fee before taxes | − $20,000 |
| GST on the fee | − $1,000 |
| QST on the fee | − $1,995 |
| Mortgage penalty | − $3,000 |
| Notary and discharge, taxes included | − $1,000 |
| Certificate, taxes included | − $1,500 |
| Other costs, taxes included | − $500 |
| Estimated net proceeds | $271,005 |
| Cash reserve retained | − $10,000 |
| Available after reserve | $261,005 |
Example excludes closing adjustments and income tax. The reserve remains your money. Available cash is not taxable profit.
Avoid omissions and double counting
Separate the project’s total budget from amounts withheld at closing. Repairs already paid have reduced your cash before the sale; they will not necessarily be deducted again at closing.
- Lender : check whether the penalty and fees are already included in the payout statement.
- Adjustments : allow for amounts payable as well as possible credits in your favour.
- Next purchase : keep its budget separate, including notary fees, inspection and transfer duties.
- Scenarios : compare several sale prices and keep a contingency reserve.
Estimate net proceeds with a buffer
Subtract the mortgage balance, confirmed penalty, selling costs, work and moving expenses from the estimated sale price. Keep a buffer rather than committing every dollar to the next down payment.
Tax consequences vary with the property’s use, residency status and personal circumstances. Professional tax advice is especially important for a rental property, a home partly used to earn income or a non-resident seller.
Frequently asked questions about selling costs
Is the displayed mortgage balance enough? No. Ask your lender for a payout statement for the planned date, which may include interest and other amounts. The penalty depends on your contract and cannot be determined with a universal formula.
Are net proceeds my profit? No. They indicate estimated cash after the selected deductions. A tax gain calculation considers other factors; it is not simply the sale price minus the loan.
Is a higher offer always better? Also compare conditions, dates and timing-related expenses. A net proceeds analysis helps assess financial consequences but does not replace reviewing the promise to purchase.