Selling a Home in British Columbia: Costs Deducted From Your Proceeds

The price in your contract is not the amount you will receive. Several items are paid or adjusted at completion, so your net proceeds are lower than the sale price.

This article lists the usual deductions for a British Columbia seller and what the law says about some of them. Amounts depend on your mortgage, your listing agreement and your contract, so use this as a map for building an estimate and confirm the figures with your lawyer.

This article covers the law of British Columbia.

The main items that come off your proceeds

Start with the sale price and subtract each item below. Some are fixed by documents you already have, and others are only known close to completion.

Mortgage payout and early payment

Your lender is paid from the sale proceeds. Ask for a payout statement showing the balance and any interest or charges for paying off early, and check it against your mortgage documents.

Federal law gives some protection. If a mortgage is not payable until more than five years after it was made, the borrower may, after five years, pay off the amount owing plus three months' interest in place of notice, and no further interest is chargeable. Mortgages given by corporations and certain prescribed entities are excluded from this rule. If you are inside the first five years, the charge depends on your mortgage terms, so read them or ask a lawyer.

Commission and the cost of completing the transfer

The listing agreement must state the remuneration and the circumstances in which it is payable. When an offer is presented, you must receive a disclosure in the approved form of what you pay the listing brokerage, any payment to the buyer's brokerage, the amount the listing brokerage keeps and other remuneration, with amounts in dollars. Whether any tax applies on top of commission is worth confirming with your lawyer or accountant.

On completion, the seller's core obligation is to deliver a transfer that can be registered under the Land Title Act. A notary public who is enrolled and in good standing may draw instruments relating to property that are meant to be registered, so a notary as well as a lawyer can prepare a transfer, but a notary not in good standing must not act. Which professional suits your sale is worth confirming with a lawyer. Charges for that work vary, so ask for a written estimate and ask what disbursements are included.

Costs you do not pay, and taxes to think about

• Property transfer tax: the buyer is liable to pay it and file the return, so it is not a seller deduction. A qualifying first time home buyer is exempt, which changes the buyer's costs, not yours.
• Capital gains on a principal residence: the CRA will only allow the principal residence exemption if the sale and designation are reported on Schedule 3. For 2017 and later sales, Form T2091 or T1255 must also be completed.
• Late designation: the penalty is the lesser of $8,000 or $100 for each complete month from the original due date to the date of the request.
• Owned under 365 consecutive days: the gain is deemed business income and the exemption does not apply, subject to listed life-event exceptions.
• Loss on sale: a loss is not deductible because a home is personal-use property.
• Non-resident sellers: if you were not a Canadian resident for the entire time you owned the home, contact the CRA because this may reduce or eliminate the exemption. Whether other tax rules apply to a non-resident seller depends on your situation, so it is worth getting advice early.

Building your own estimate: what to do next

Strata owners can request an information certificate, which the strata corporation must provide within one week and which discloses the monthly strata fees. It is a useful starting point for adjustments.

• Request a payout statement from your lender.
• Read the remuneration disclosure for the dollar amount of commission.
• Ask your lawyer or notary for a written estimate of charges and disbursements.
• Request the strata information certificate if you own a strata unit.
• Confirm with your lawyer how adjustments will be calculated on your completion date.
• Ask an accountant whether your sale needs to be reported and designated.

Ask your lawyer for a draft statement of adjustments before completion so there are no surprises.

Frequently asked questions