Beware; there are the hidden costs of selling your property in Canada you might not know about. Are you been thinking of selling your property and maybe moving into retirement living you’ve been checking out? Selling your property can be a very profitable affair, especially if you have had that piece of property all your life. That means you may have bought it at time when property was not very expensive and could be enjoying the appreciation, which has occurred over the years. However, there are hidden costs of selling your property in Canada involved in selling your property and before you list your property for sale, you might want to check out these costs.
Hidden costs to sell your sell your property in Canada are:
- Are you going to sell your property through a real estate agent or try selling it on your own? The fee is approximately 6% plus taxes.
- How much do you estimate it will cost to prepare your property for sale?
- Do you know what would it cost to pay off your mortgage including penalties, discharge and other charges?
- Are there any repairs or upgrades you need to do that would help sell your property?
- Are you going to hire a professional to stage your property?
Staging is changing the appearance of your property to make it more appealing to potential buyers—for example, renting furniture for a room.
Clutter, Grime, and Odors. Deal with it…
Living in our homes, we get used to things and we like them that way. All the family photos and bowling trophies may be family treasures but to a buyer trying to imagine themselves at home, too much information is a turn-off.
Other hidden costs of selling your property in Canada
- Legal costs
- Realtors fee plus taxes
- Insurance cancellation
- Adjustments (property taxes, utilities, condo fees, etc.)
- Mortgage penalties & discharge fees
- Moving costs
- Hiring a mover or renting a truck
- Packing materials
- Hotel costs, if required
- Disposing of Junk
The prepayment charge for a closed, fixed-rate mortgage is usually the greater of:
- three months’ interest on the outstanding balance of your mortgage, or
- the interest rate differential (IRD): an amount based on the difference between two interest rates. The first is the interest rate for your existing mortgage term. The second is today’s interest rate for a term that is similar in length to the time remaining on your existing term. For example, if you have three years left on a five-year term, your lender would use the interest rate it is currently offering for a three-year term to determine the second rate for comparison in the calculation.
When you’re selling your property, especially if it’s an old one, chances are there are many things that need to be repaired or replaced. Perhaps that 1990s toilet needs to be revamped or the kitchen cabinets need to be changed. It’s easy to get carried away with repairs. Think about it, you’re finally getting around to all of those things that you were meaning to get done over the years. The list could include light switches, dimmers, painting, re-grouting, and while they sound small, it’s these little things that can easily turn into thousands of dollars, especially if you’re hiring an expert to do that for you.
What you need to do is to pay attention to the repairs that have a major visual impact and would affect the property value. For example, a new kitchen would excite buyers more than new room carpets.
At the end of the day, the more prepared you are, the smoother the process and the less expenses you will incur. It all comes down to clear thinking and a few calculations, to make sure the cost of selling isn’t eating too far into your well-earned capital.
Failing to Complete Disclosures
CAVEAT EMPTOR, BABY!
Being upfront about any issues with your home will save you time, money and face. You may not want to mention the time the firetrucks showed up or the time you flooded the basement.
When do you report a capital gain or loss?
Report the disposition of capital property in the calendar year (January to December) you sell, or are considered to have sold, the property.
Regardless of whether or not the sale of a capital property results in a capital gain or loss, you have to file an income tax and benefit return to report the transaction (even if you do not have to pay tax). This rule also applies when you report the taxable part of any capital gains reserve you deducted in 2014.
- A donation of securities to a registered charity or private foundation does not trigger a capital gain.
- If you sell an asset for a capital gain but do not expect to receive the money right away, you may be able to claim a reserve or defer the capital gain until a later time.
Reporting the sale of your principal residence to Canada Revenue Agency (taxman)
When you sell your principal residence or when you are considered to have sold it, usually you do not have to report the sale on your income tax and benefit return and you do not have to pay tax on any gain from the sale. This is the case if you are eligible for the full income tax exemption (principal residence exemption) because the property was your principal residence for every year you owned it.
Starting with the 2016 tax year, generally due by late April 2017, you will be required to report basic information (date of acquisition, proceeds of disposition and description of the property) on your income tax and benefit return when you sell your principal residence to claim the full principal residence exemption.
Are you aware of hidden costs of selling your property in Canada? What other costs should you be aware of when looking to sell? Have you sold your property in the last 5 years? We buy houses for cash with fast closing.