Selling a home in Canada can be a great financial endeavour, but it's essential to understand the potential taxes involved. Here are 3 different taxes that might arise during the sale of your property:
If you are selling a newly constructed or extensively renovated property, you may need to charge GST or HST on the sale. However, if the property was your primary residence, you might be eligible for a rebate on the GST/HST paid. The rebate amount depends on your home's sale price and how much GST or HST was paid.
Even if your home is your primary residence, some GST/HST may still apply. Commissions paid to your real estate agent are subject to GST/HST. For instance, a five-percent commission on a $500,000 home ($25,000) in Ontario could lead to an additional $3,250 in HST.
Capital Gains Tax
At present, no capital gains tax applies to the sale of your primary residence. However, different rules apply if you own a vacation home or a rental property. While a partial exemption may still be available, the calculations are more intricate. Individuals engaged in "house flipping" may be subject to capital gains tax if the property wasn't their primary residence for at least a year. In such cases, consulting a tax professional could prove invaluable in navigating this process.
Property taxes are typically prorated, meaning you'll be responsible for a portion of the property taxes for the year of the sale.
In Canada's dynamic real estate landscape, comprehending these taxes is vital. From GST/HST considerations to potential capital gains tax changes, being well-informed empowers you to make sound decisions. If you have any questions, do not hesitate to reach out!