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.
Example: a $1.5M Toronto sale
Here’s how the calculator’s default numbers work out for a home selling for $1,500,000 with a $600,000 variable-rate mortgage at 4.89% and 24 months left in the term.
| 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 |
In this example the seller pays $99,985 in costs, about 6.7% of the sale price, on top of paying off the mortgage. Commission and HST make up $84,750 of that.
What you can control
- 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.
Seller Net Proceeds: Frequently Asked 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), which depends on how far rates have moved since you signed and how much time is left in your term. 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 to the new property. If your term ends soon, timing your closing around your renewal date can eliminate the penalty entirely. It’s worth talking through before you set a closing date.
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 (property tax, utilities and condo fees). For a number you can plan around, book a strategy call and we’ll pull recent sales on your street and walk through it with you.