Do You Pay Tax When You Sell Your House?

Do You Pay Tax When You Sell Your House?

If you are thinking about downsizing and selling your current property, you are likely wondering what taxes are associated with the upcoming sale. We are here to answer all of your questions—but first, make sure you’ve covered all your bases with our handy Home Sellers Checklist, and don’t hesitate to reach out to West Haven Group for all of your listing needs.

Now, let’s focus on the question at hand – do you have to pay tax when you sell your house? This isn’t a simple yes or no answer but we will help break it down.


Let’s start with the concept of Capital Gains

As we outlined in our blog, Capital Gains in Vancouver- How to Reduce Your Taxable Income, a common misconception of capital gains is that it is a tax in and of itself. However, there is no ‘capital gains tax.’ In its most simple form, you incur a ‘capital gain’ when you sell your property, for more than you purchased it for. Conversely, if you sell your property for less, you would incur a capital loss and can use that loss to offset other capital gains or carry it forward to offset capital gains in future years.

So, when do you have to pay tax and how much is it?

Since the capital gain is a form of personal income, you are required to pay tax on it…sometimes.

Whether you have to pay tax on this comes down to your use of the property. Has this property been your principal residence for every year that you’ve owned it? If so, then you are exempt from paying taxes on any gain from the sale. However, it is crucial that you still report the sale of your property on your income tax and benefit return in order for the CRA to recognize the principal residence exemption.

If your property was not your principal residence for the entirety of ownership, then you have to report the part of the capital gain for these years. This is why it is important to talk to an accountant and a real estate agent if you are considering buying another property to make sure you have a smart plan in place for your properties to protect yourself and your investments.

If it is an investment property, a rental, or a vacation home then you likely can expect to pay capital gains upon selling if you make a profit—although there are fees and deductions that will affect the gain itself, such as costs associated with buying and selling.

In terms of the actual amount, in Canada, you typically have to include 50% of the capital gains as income on your tax return. Keep in mind though that there are differences based on the provincial and national tax rates, as well as your personal tax bracket due to the taxable portion of your capital gain being added to your annual income—this is not a stand-alone payment.


Other types of tax

For this particular article, we’ve focused purely on the taxes you may have to pay upon selling your home but keep in mind that there are other taxes when it comes to property ownership including:

  • Property Transfer Tax: When you purchase or gain an interest in a property, you have to pay the transfer tax based on the market value of the property at the date of registration unless you qualify for an exemption.

  • Annual property taxes: Annual property taxes are paid for each property you own to fund services in your area.

  • Withholding Taxes: If you are a non-resident selling property in Canada, your lawyer is required to hold in trust 25% of the gross proceeds of the sale for your share of the property, until the issuance of the Certificate of Compliance by the CRA.

If you want to learn more – check out another article from our capital gains series, How Do I Report Capital Gains in BC?

We are here to help

While West Haven Group is a team of real estate specialists, please keep in mind we are not tax professionals. For more in-depth details on this, we recommend reading the Government of Canada’s Disposing of your principal residence article and also seeking advice from an accountant.  Please reach out to discuss your property needs, we can’t wait to connect. 

Don’t Let Closing Costs on Your New Vancouver Home Catch You off Guard

Don’t Let Closing Costs on Your New Vancouver Home Catch You off Guard

For many of us, purchasing a new home is one of the largest financial decisions we will make. As exciting as it is, it is not uncommon for new buyers to be caught unaware by additional closing costs in Vancouver. Depending on the size and type of property, your closing costs could equal an additional 2-4% of the total purchase price, and in Vancouver, this could be in the 10’s of thousands of dollars. Not only is it important to understand where the additional fees may be charged (and their value), but they also need to feature in your calculations for securing a mortgage.

Closing Costs in Vancouver- Taxes

Property Transfer Tax

Property transfer tax, or PPT, in Vancouver, is a fee to transfer the title of the property into your name. It is calculated using the following scale:

  • 1% on the first $200,000

  • 2% on the balance up to and including $2,000,000;

  • 3% on the balance greater than $2,000,000

Whilst some concessions are available for first-time buyers, up to the value of $475,000, this typically won’t grant you a concession on your closing costs in Vancouver.

Pre-paid property taxes (usually included in the total legal fee bill)

All residents of BC are required to pay an annual property tax. It is due the first business day after July 1, and the amount you have to pay will depend on when you bought your property during the year.

If you purchase before July 1, the seller will reimburse their portion from the beginning of the year (Jan 1). If you purchase after July 1, but before December 31st, the property taxes will have already been paid by the seller, and you’ll be required to reimburse them.

You may also be required to reimburse the seller for other pre-paid services and taxes, such as Hydro or gas.

Goods and Services Tax (GST)

The GST cost is only applicable to new dwellings. It is charged at 5% of the property price. There are rebates available (36%) on properties up to $350,000, and a smaller rebate on properties up to $450,000. However, these rebates will not apply to properties in Vancouver as new dwellings will typically cost more than the threshold.

New Levy

Recently it has come to light in the 2020 budget there may soon be a property tax hike of up 8-9% in Vancouver. This could be voted in not long before you close, and would affect the property tax rate on your property in the city.

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Closing Costs in Vancouver- Fees

Appraisal Fees

Depending on your financial circumstances it is likely you’ll need to pay for a property appraisal in order to obtain a mortgage. These are usually around $500-700 and may lead to increased costs if the inspection finds any issues with the property (such as additional specialists, or remedial work if you choose to purchase the property).

Survey Fees

If you’re purchasing a house or other Torrens titled property, you may also be required to pay for a property survey. This is to confirm that property boundaries and other compliance issues are up to date. The fee for a land survey is around $500 plus GST.

Legal Fees

Legal fees tend to encompass a few things, but generally speaking, it is for a lawyer or notary to help confirm all the correct paperwork. You can expect to pay up to $1500 for services including:

  • A title search to identify/confirm the property is actually owned by the person selling it, and it doesn’t have any caveats/liens attached.

  • Drafting the new title deed

  • Help with preparing a mortgage

  • Contract reviews

  • Registration of the new titleholder

  • Exchange of funds

Closing Costs in Vancouver- Mortgage and Insurances

Mortgage Prepayment Penalty

Paying off your mortgage earlier than expected is a dream come true for many of us, however, for banks, it means less interest than expected on the term of the loan. Depending on the structure of your mortgage, you could be subject to a penalty for closing your mortgage early. Typically, this penalty is calculated as:

  • 3 months worth of interest, based on the amount still owed


  • A differential figure calculated as the difference between:

-Your current interest rate
-The market interest rate for a mortgage of the same length (the length being the length of time you have left on your existing mortgage). This percentage figure is then used to calculate your fee, based on the mortgage amount remaining to be paid.

The figure used (or the method of calculation) will be stipulated in your mortgage contract. When setting up your mortgage you can also opt for an open (variable interest rate but with no pre-payment fee) or closed (fixed rate with pre-payment penalties) mortgage. In some cases, you may also be able to simply move your mortgage to a new property, however that will be at the discretion of your lender.


Depending on your circumstances, you may need to account for some or all of:

  • Home and contents insurance

  • Strata Insurance and Premiums- for both your individual property and any required by the strata body

  • Mortgage default Insurance (could cost an additional 0.60% to 3.85% based on the value of your mortgage)

  • Title insurance

Increased Insurance Premiums

Due to a number of natural and unnatural events, many strata-titled buildings in Vancouver are experiencing significant cost increases on their strata insurance. For a more detailed explanation on these increases please see Strata Insurance Premiums in Vancouver are Rising- Here’s How to Protect Yourself

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Closing Costs in Vancouver- Strata Fees

Move-in Fee (Strata)

If you have recently purchased a condo the chances are high that you’ll be charged a move-in fee by your strata corp. This figure will vary depending on the building, however, you should budget anywhere from $100-$300. We’ll also note that this fee is usually paid by the landlord, so even if you plan to let your property, this is still something to take into consideration.

Strata Maintenance Fees

These can be due once a month, for the upkeep and maintenance of common areas. These will vary depending on the building and its requirements.

Other Closing Cost Considerations

There are a number of other costs that tend to be left out of calculations. However, if your budget is tight, or you want to more accurately track your spending, other costs include:

  • A professional clean (sellers don’t always do a good enough job)

  • New paint or flooring or wall repairs (not seen when the home was filled with the seller’s furniture)

  • Services, such as internet, water, power

  • Replacing locks

  • Moving costs- truck hire, moving company etc…

These costs will all vary depending upon your circumstances. At the West Haven group, our dedicated team can help you to plan and budget, to find your new home. If you would like more information, or for regular industry insights and updates, you can reach us via email.