How to estimate your net proceeds when selling a Waterloo Region home
Net proceeds are the sale price minus what you owe at closing: the commission and HST, your lawyer, your mortgage payout and a few adjustments. Ontario differs from many places in one way that helps sellers. The land transfer tax is a buyer's cost, so it belongs in the budget for your next home. Our net proceeds calculator does this arithmetic for you.
General information, not tax, legal or financial advice. Closing costs depend on your contract, your lender and your lawyer, and tax rules change. Ask a lawyer licensed in Ontario for a closing estimate and an accountant about tax on any gain.
What comes off the sale price in Ontario
A net sheet for a Waterloo, Kitchener or Cambridge sale usually has these lines:
- Real estate commission, set in the listing agreement
- HST on the commission and on other taxable services
- Your lawyer's fee and the costs the lawyer pays on your behalf
- Your mortgage payout, plus any prepayment charge
- For a condominium, the status certificate
- Adjustments, such as property tax, that are settled on closing day
Notice what is missing: a land transfer tax. The next section explains why. Try the net proceeds calculator alongside this page to put your own figures in.
Commission and HST
The commission is agreed between you and the brokerage in the listing agreement. RECO tells sellers that commissions and fees vary between brokerages and may depend on the services you want, and to review the contract carefully before signing. The RECO Information Guide also describes holdover clauses: if your agreement has a 30-day holdover, you might owe the commission on a sale made in that period after the agreement expires. Ask any agent to show you the full terms and the holdover length before you sign. No figure is given on this page, because it is a matter for each contract.
Real estate agent services are taxable. The CRA says a registered real estate agent has to charge and remit GST/HST on their commission and other services, even when the property itself is exempt. In Ontario the CRA's example uses 13 percent HST. So when you read a commission quote, ask whether the HST is shown separately.
Your lawyer, your mortgage and any prepayment charge
Your lawyer's fees and disbursements depend on the firm and the file, so ask for a written estimate, which should show HST. The CRA's moving-expense page lists legal fees, commission and mortgage penalties as costs of selling a home, which tells you what category they fall in, though a retirement downsize does not qualify for that deduction.
Your lender sets the payout amount and any prepayment charge, and it varies by lender and mortgage type. Ask for a payout statement in writing, with the date it is good to and the daily interest after that. If you have a line of credit or other debt secured on the home, it is paid out the same way.
Condo status certificate
If you sell a condominium unit, a buyer's lawyer will want the status certificate. The Condo Authority of Ontario says the corporation can charge up to $100 including all applicable taxes and must provide it within 10 days. Ask your lawyer who orders it for your sale and who pays.
Adjustments and tax certificates
Ask your lawyer which adjustments, for example for property tax and utilities, will appear on your closing statement. The figure may move in either direction. The City of Waterloo charges $91 per tax certificate, which shows the year's taxes, payment history, penalties and any balance. Ask your lawyer which certificates your file needs. See the property tax relief guide if you have a deferral to settle.
The seller pays no land transfer tax, but the buyer does
Per Ontario.ca, when you acquire land you pay land transfer tax to the province when the transaction closes. That is the buyer. Only the City of Toronto levies its own municipal tax on top, so Waterloo Region has no municipal land transfer tax. If you sell here and buy here, you pay the provincial tax on your purchase.
The rates below apply to agreements after November 14, 2016 and come from the Ontario page on calculating land transfer tax.
| Portion of the price | Rate |
|---|---|
| Up to $55,000 | 0.5% |
| $55,000.01 to $250,000 | 1.0% |
| $250,000.01 to $400,000 | 1.5% |
| Over $400,000 | 2.0% |
| Over $2,000,000, for land with one or two single family residences | 2.5% |
These are marginal rates, so each rate applies only to the slice of the price in its band. The taxable amount also includes liabilities you assume and other consideration, not just the sale price. The Ontario page states no rounding rule.
Worked examples
The $400,000 figure is Ontario's own example. The others use the same bands.
| Purchase price | Calculation | Land transfer tax |
|---|---|---|
| $250,000 | $275 + $1,950 | $2,225 |
| $400,000 | $275 + $1,950 + $2,250 | $4,475 |
| $600,000 | $275 + $1,950 + $2,250 + $4,000 | $8,475 |
| $900,000 | $275 + $1,950 + $2,250 + $10,000 | $14,475 |
At $600,000 the last piece is $200,000 × 2 percent, and at $900,000 it is $500,000 × 2 percent. A first-time buyer refund exists, but it is for people who have never owned a home anywhere, so it does not help someone who has owned before. Your tax follows the price of the home you buy, so run it for each home you are considering. Add it to the cash you need on closing day. For new builds, ask the builder what HST is included in the price.
The principal residence exemption and the duty to report
The CRA's principal residence page says that since 2016 the exemption is allowed only if you report the sale and the designation on your tax return, using Schedule 3 and Form T2091(IND), even when the whole gain is exempt. Forgetting this step is the avoidable mistake, so put it on your list the day the sale closes.
The plus-one rule
One property per family unit can be designated for each year from 1993 onward, and a family unit means you, your spouse or common-law partner and dependent children. Under the "plus one" rule, if you sell one home and buy another in the same year, both can qualify for that year even though only one is designated. Land is usually limited to half a hectare (1.24 acres) unless more is needed.
Rented homes, cottages and short holds
- Rented out. A change in use is treated as a sale at fair market value, and elections can defer that. The details depend on your situation, so ask an accountant before you rent out a home you plan to sell.
- Cottage or second property. Only one property per family unit can be designated for a year. A gain that is not exempt is taxed with a 50 percent inclusion rate, per the CRA's T4037 guide.
- Sold within 365 days. A home held for fewer than 365 consecutive days can be treated as business income, unless the sale follows certain life events such as a death, an illness or a household change.
Non-resident sellers. If you are not a Canadian resident when you sell, section 116 of the Income Tax Act requires notice to the CRA, using Form T2062 and a buyer can become liable if no certificate is provided. See the CRA circular and speak to a lawyer and an accountant before listing.
When the numbers become firm
An estimate before listing is a range, and the figures harden in stages. The listing agreement fixes the commission terms. An accepted offer fixes the price. Your lender's payout statement fixes the mortgage line close to closing, and your lawyer's statement fixes the adjustments. Treat each stage as a chance to update the sheet, and keep a cushion for items that arrive late, such as repairs a buyer's inspection leads you to agree to. See Ontario seller disclosures for what a seller owes a buyer.
A net sheet you can fill in
Before you list, ask your agent and lawyer to help you complete a sheet like this. Each line has a source, and none of the dollar amounts is guessed here.
| Line | Where the number comes from |
|---|---|
| Sale price | Your accepted offer, or your own scenarios |
| Commission and HST | Your listing agreement |
| Lawyer and disbursements | Your lawyer's written estimate |
| Mortgage and other payouts | Your lender's payout statement, including any prepayment charge |
| Status certificate, if a condo | Up to $100 under the condominium rules, per the Condo Authority of Ontario |
| Adjustments | Your lawyer's closing statement |
| Land transfer tax on the next home | The bands above, applied to the purchase price |
| Moving, storage and repairs | Quotes from the companies you plan to use |
Subtract the seller-side lines from the sale price to see the cash from the sale. Then subtract the land transfer tax and the moving costs to see what is left for the next home. The guide to estate sales, consignment and donation covers the contents of the house, which can offset some of those costs or add to them.
Putting it together before you list
A fair net estimate has three parts: what you owe at closing, what you will need for the next home including land transfer tax, and the tax filing afterward. Gather a payout statement, a written lawyer estimate and the listing agreement terms. Then use the calculator at a few prices. The costs and taxes page covers the wider budget, and the downsizing guide shows where this fits in the sequence. For local context see Waterloo and Kitchener, and the resources page lists who to call.
When you are ready, you can ask for an introduction to an agent on the operating team at eXp Realty. That is not a search of the whole market, and your agent does the listing work.
Questions people ask
Do sellers pay land transfer tax in Ontario?
No. Ontario says you pay land transfer tax when you acquire land and the transaction closes, so the tax falls on the buyer. If you sell a home and buy another, you pay it on the purchase, not on the sale. Only the City of Toronto adds a municipal tax, so there is none in Waterloo, Kitchener or Cambridge.
How much land transfer tax will I pay on my next home?
It is marginal: 0.5 percent to $55,000, 1 percent to $250,000, 1.5 percent to $400,000 and 2 percent above that, with 2.5 percent on the portion over $2,000,000 for one or two single family residences. A $400,000 purchase is $4,475, $600,000 is $8,475 and $900,000 is $14,475.
Do I pay tax on the profit when I sell my principal residence?
Generally the gain on a principal residence can be exempt, but since 2016 the CRA allows the exemption only if you report the sale and designation on your return, using Schedule 3 and Form T2091(IND), even when no tax is owing. Your accountant can confirm how the rules apply to you.
Is real estate commission fixed in Ontario?
RECO says commissions and fees vary between brokerages and may depend on the services you want, so read the contract before you sign. The amount is set in your listing agreement with the brokerage. Ask your agent to explain every line, including HST and what happens if you sell after the agreement ends.
What if the sale price is lower than I hoped?
Net proceeds move with the price, but some costs such as the mortgage payout do not. Run your own numbers at a few prices using the calculator, then ask your lawyer and your lender for a written statement. A calculator is an estimate, not a closing statement.
Related guides
- Buy first or sell first when you downsize in OntarioThe trade-offs of buying before selling or selling before buying in Ontario: conditional offers, closing dates, bridge financing, a HELOC, the plus-one rule and land transfer tax timing.
- Capital gains tax when selling a house in Ontario: the principal residence exemption explainedHow capital gains work when you sell an Ontario home: the principal residence exemption, reporting on T2091, rented homes and cottages, the flipping rule and the 50 percent rate.
- Land transfer tax in Ontario: who pays, how much and what downsizers should budgetWho pays Ontario land transfer tax, the bands with worked examples, why there is no municipal tax here, why downsizers miss the first-time refund and what to budget.
- Ontario property tax relief for seniors: grants, credits and deferralsThe Ontario senior homeowners grant, the energy and property tax credit, municipal deferrals and the MPAC exemption, and which ones travel with you to the next home.
Talk it through with a local downsizing specialist
We can introduce you to a Waterloo area agent, registered in Ontario with eXp Realty who works with homeowners moving to less house. Waterloo Downsizing is operated by registered agents affiliated with eXp Realty and is not itself a brokerage.