The Cost of Selling Your Home
The cost of selling your home is not only about commission. Although that is the majority of the fees in most cases. Here is a list of other additional costs when selling your home.
Commission
There isn’t always commission associated with the sale of your home. Commission is paid typically a realtor or real estate brokerage in the event you decide to hire one. The actual cost of commission is not a set amount. Realtors are allowed to negotiate and set an agreeable amount with home sellers depending on services rendered. As a part of that amount a portion is shared with a cooperating or buyer brokerage. When hiring a realtor they can detail their specific fees and how they structure compensation and structure of commissions.
Legal Fees
There are a few components to legal fees. First, there is the lawyers fee for service. This differs from place to place, lawyer to lawyer. This fee can range anywhere from a few hundred, to a few thousand dollars. Above and beyond the lawyers fee there is additional fees that are called “disbursements”. These are fees incurred by the lawyer during the closing of the transaction that are then billed back to you the home seller. These can include: title search, parcel registration, unpaid taxes, utility balances, courier services and so on. These fees are paid on closing and become a total amount that you will bring with you to the lawyers office when papers are signed to close the transaction. Alternatively, they are deducted from the proceeds of the sale of your home.
Land Transfer Tax
Land transfer tax is like most taxes. It’s unavoidable. Each province, and sometimes even city will have their own forms of Land Transfer tax (LTT). LTT is paid by the buyer in closing of a land purchase. This particular amount must be paid in cash. Unlike other other associated closing costs such as insurance premiums LTT cannot be rolled into or amortized over the course of a mortgage. Calculations can vary however, to get an idea of how much you will pay and how land transfer tax is calculated find out more here.
Closing Costs
Above and beyond commissions, legal fees and land transfer tax there are further closing costs that you will be responsible for. Depending upon if you are on the buying or selling side, these closing costs are (including but not limited to):
Moving, Movers and shipping or storage fees
Utility hook up, transfer or cancellation fees
Cleaning services
Mail forwarding services
Bridge Loans or Mortgage penalties
Banking and Lending Fees
No two banks are alike. Neither are their fees. When deciding to sell your home it is always wise to reach out to your bank or a mortgage broker to learn about their fees. No matter if you are selling and buying or just selling there could be additional fees you are unaware. For example; there could be applicable penalty fees if you break your mortgage before the term. More over, there could be lending fees that you will pay when you purchase a new home. These costs can in fact be substantial. Prior to making a decision to sell your home, you should always be aware of these costs.
Capital Gains Tax
Capital gains tax could be one of the most misunderstood costs of selling your home. Simply put, Capital Gains are an increase in value on any investment. This also applies to a home. In Canada, you do not currently have to pay capital gains tax on the increase in value of your principal home. However, if the home was an investment property or secondary home and is sold capital gains tax may apply. Meaning you will owe taxes on the increase in value on or after closing. The capital gains tax rate in Canada is 50%. This amount can vary depending upon circumstances. If you are selling a secondary or investment property it would be wise to discuss your potential tax rate with your lawyer and accountant. You can learn more about capital gains taxes here.
And there you have it. A brief list of the costs to sell your home. Each scenario is unique and some or all of these fees may not apply. If you have questions or want to discuss the potential costs of selling your home we are always here to help.
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