Where Does Your Money Go When You Sell Your House?

When you decide to put your house up for sale, you can guarantee you’ll incur expenses before the sale. Here’s a list to help you plan. These might not all pertain to you but you can bet at least some of them will.

Home staging: Your real estate broker might recommend bringing in a home stager to help make your property look its best. It’s not uncommon to rent furniture for empty rooms. Normally the consultant will charge an initial cost for a walk-through that typically lasts 1-2 hours, depending on the size of your property. The cost involved for staging will depend on how many rooms and how much furniture you’ll need to rent. Normally they’ll try to as much of your furniture as possible.

Home cleaning, maintenance and repair: To get the best return on your investment, details matter. You may need to hire professional cleaners, landscapers, and tradespeople. A well-detailed house will normally attract more buyers.

Certificate of Location: You’ll need a new certificate of location if yours is older than 10 years or if you’ve made changes to the exterior. The price will vary between a condo and a house, however expect to pay anywhere from $575 to $850

Costs for discharging your mortgage: If you own your home free and clear, congratulations you won’t be incurring this cost. For the rest of you, contact your financial institution and ask them how much it’s going to cost for an early discharge. There will most likely be a penalty. Try and get the amount in writing so there won’t be any surprises or miscommunication.

Bridge financing: Are you buying a house at the same time that you are selling? This means you might own two properties for a short period of time. Your mortgage lender can arrange bridge financing for you. This means the bank will charge you a fee for the interim between buying your new home and selling your old.

Notary costs: Normally the buyer pays for the notary. However, if you have a mortgage on your property, the notary will charge you for their time and their costs to discharge it.

Adjustments: The notary will also calculate the adjustments for the sale. This includes municipal and school taxes. Other possible adjustments include the buyer reimbursing you for the oil in your tank, rents, condo fees, etc. In most cases, the buyer will end up owing to the seller. However there are occurrences where it could be the other way around.

Real Estate Broker Fees: Once you’ve chosen a real estate agent to sell your home, they’ll present you with a brokerage contract and you’ll have to agree on a fee. This includes the amount that you will be offering to the buyers’ broker for bringing the buyer into the transaction.

Have a candid discussion with your broker to confirm what kind of service you can expect and their marketing plan. Remember that brokers’ fees are subject to GST & PST.

Capital gains tax: If your home is your primary residence, you will not have to pay any capital gains tax when you sell. If your property is an investment or second property such as a vacation home, you will have to pay some tax. If you are living on the property and renting out a portion of it, you will have to pay capital gains on the percentage of the home that is being rented out. Talk with your accountant.


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