Selling Property in Canada

Canada-P-Selling Property

You may chose to sell property in Canada privately or with the assistance of a real estate agent. In either case you should have your property appraised by an appraiser, and inspected by a property inspector.

Real estate agents can assist you in setting an asking price for your property, or you can conduct your own comparative market analysis on the local real estate market.

If you chose to sell your home privately you can save on real estate agent fees, but will have to facilitate showings, offers, and paperwork on your own. You can list property for sale in Canada online, on sites like Kijiji and Craigslist, in local newspapers and magazines, or through social media.

If you chose to work with a real estate agent you should inquire how long they have been in the business, what neighborhoods they are familiar with (hopefully, yours), what teams or assistants do they work with, how many homes they have listed and sold in the past year, how they will market your property, when they are available (part time, full time), how you can prepare your property to sell, if they will hold open houses (days on which prospective buyers can walk through and view your property without an appointment), what the agent would price your property at, and if they can provide references.

Real estate agent fees are between 3% and 7% of the selling price of your property. You can negotiate real estate commissions. You must pay sales tax on real estate commissions.

You are responsible for paying utilities and property taxes until the deal on the sale of your property closes.

Fees

Mortgage Discharge Fee

In Canada, unless your property is fully paid off, you must pay a mortgage discharge fee of approximately $270. If you are buying another property you may be able to transfer your mortgage.

Taxes

Taxation of Canadian real estate depends on whether the use of the property is for a principal residence, an active business, or an active property/income property.

Non-residents of Canada must pay taxes on gain capital (the difference between purchase and sale price) when selling property in Canada. This is typically 50% of the gain. Non-residents are also required to pay an estimate of this tax before the sale of their property, typically 25% of the gain. In this case the other 25% is paid after the sale.

However, if you have received resident status in Canada before selling your property, and this property is your primary residence, you are exempt from paying taxes on gain capital.

Non-residents should file a Canadian income tax return for the year in which the sale occurs. Non-residents should expect to receive a refund on a portion of the taxes paid.

If a non-resident of Canada who owns property in Canada dies, his/her property is inherited by his/her successors. There is no inheritance tax in Canada. However, if the heir is not a resident of Canada, the heir is responsible for paying taxes on gain capital when/if he/she sells the property. If the heir is a resident of Canada, and the inherited property was his/her primary residence, they are exempt from paying taxes on gain capital.

Certificates of Compliance

When selling Canadian real estate, non-residents must notify the Canadian government within ten days of the completion of the sales transaction to obtain a certificate of compliance. A certificate of compliance will only be issued if the Canada Revenue Agency (CRA) has received either a prepayment on account of the taxes owing or appropriate security for the prepayment. If you do not provide notice of sale to the CRA you may be charged a financial penalty. Penalties are either $100 or $25 for every day past the ten-day deadline, whichever amount is greater.

By Jess Gerrow, who traded city life in Canada for island life in the Mediterranean two years ago. She is a postgraduate marketing student, blogger, and freelance writer.