How it works
How seller net proceeds work in Toronto.
Your net proceeds are what’s left of the sale price once every cost and debt tied to the home is paid on closing. Your real estate lawyer pays these out of the sale funds and sends you the balance, so the number that reaches your bank account can be very different from the price on the agreement.
When you sell relative to your mortgage term
Closing on or after your renewal date avoids the prepayment penalty. On a fixed-rate mortgage, the interest rate differential (IRD) can be far higher than three months’ interest, so check your payout statement before you pick a closing date.
Whether you port your mortgage
If you’re buying again, many lenders let you move your existing mortgage to the new home, which can avoid the penalty.
How you price and prepare the home
Your sale price moves your net more than any single cost, so pricing it right from day one and spending on prep that buyers notice matters most.
Worked example
A $1.5M Toronto sale.
Based on a $600,000 variable-rate mortgage at 4.89% with 24 months left in the term. Selling costs come to $99,985, about 6.7% of the sale price, on top of paying off the mortgage.
| Sale price | $1,500,000 |
|---|---|
| Listing brokerage commission (2.5% + 13% HST) | −$42,375 |
| Buyer’s brokerage commission (2.5% + 13% HST) | −$42,375 |
| Mortgage payout | −$600,000 |
| Prepayment penalty (three months’ interest) | −$7,335 |
| Mortgage discharge fee | −$400 |
| Legal fees and disbursements | −$2,000 |
| Pre-listing prep | −$2,500 |
| Moving | −$3,000 |
| Estimated net proceeds | $800,015 |
Planning your sale
Where to look next.
FAQ
Common questions.
What costs come off my sale price?
The biggest items are real estate commission (plus HST), the balance on your mortgage and any other debt secured on the home, and a prepayment penalty if you’re breaking your mortgage early. Smaller costs include legal fees, the mortgage discharge fee, pre-listing prep and moving.
Do sellers pay land transfer tax in Ontario?
No. Land transfer tax is paid by the buyer, so it doesn’t come out of your proceeds.
Is HST charged on real estate commission?
Yes. In Ontario, 13% HST is added to the commission, which is why the calculator includes it by default.
How is my mortgage prepayment penalty calculated?
For most variable-rate mortgages, the penalty is three months’ interest. For fixed-rate mortgages, it’s usually the greater of three months’ interest or the interest rate differential (IRD). Every lender calculates the IRD a little differently, so ask yours for a payout statement before you list.
Can I avoid a mortgage penalty?
Sometimes. If you’re buying another home, you may be able to port your mortgage. If your term ends soon, timing your closing around your renewal date can remove the penalty entirely.
Will I owe capital gains tax?
If the home has been your principal residence for every year you’ve owned it, the sale is generally exempt. If it’s a rental, an investment property or a second home, capital gains tax may apply. Talk to your accountant before you sell.
When do I receive the money?
On closing day. The buyer’s funds go to your lawyer, who pays off your mortgage and any other amounts owing, then releases the balance to you.
How accurate is this estimate?
It’s a solid starting point, but your final number depends on your actual sale price, your lender’s penalty formula and the adjustments on your lawyer’s statement of adjustments. For a number you can plan around, book a call and we’ll pull recent sales on your street.
Thinking about selling?
Let’s talk strategy.
What you net comes down to price, timing and the costs you can control. We’ll walk you through pricing, prep, your mortgage payout and closing before you list.
