Closing Costs & Proceeds of Sale - For Sellers

Calculating Closing Costs and Proceeds from Sale

Before listing your property, it's essential to understand what you’ll walk away with after the sale. Many sellers focus solely on the sale price, but it’s the net proceeds—what’s left in your pocket after all costs are paid—that truly matters.

This is especially important if you're planning to buy another property, relocate, or use the funds for a specific purpose. Having a clear picture of your bottom line will help you make smarter decisions, avoid financial surprises, and determine if now is the right time to sell.

Here’s a breakdown of the most common closing costs and how to calculate your net proceeds:

1. Real Estate Commission

This is typically the largest cost associated with selling. Commission is usually a percentage of the final sale price and is split between the listing and buyer’s agents. The rate is negotiated when you sign the listing agreement. For example, if your property sells for $600,000 and the total commission is 5%, you’ll pay $30,000 plus HST (if applicable).

2. Legal Fees

You’ll need a real estate lawyer to prepare closing documents, handle title transfers, and disburse funds. Legal fees vary by lawyer and complexity, but typically range from $1,000 to $2,500, plus HST and disbursements.

3. Mortgage Discharge & Prepayment Penalties

If you still have a mortgage on the property, your lender will charge a discharge fee (often around $300–$500) to remove the lien from the title.
If you’re breaking a fixed-term mortgage early, you may also face a prepayment penalty, which can be significant. This amount depends on your lender and the type of mortgage you have, so it’s important to contact them directly for a payout statement.

4. Property Tax & Utility Adjustments

On closing, you'll either receive or owe prorated amounts for property taxes, utilities, or condo fees. For example, if you've prepaid property taxes beyond the closing date, the buyer will reimburse you for the portion they’ll use. If there are any unpaid amounts, they will be deducted from your sale proceeds.

5. Home Preparation Costs

While not technically closing costs, you should also account for any pre-listing expenses such as:

• Staging consultations or staging rentals

• Repairs and maintenance

• Cleaning services

• Lawn care or snow removal leading up to closing

These costs are often paid out-of-pocket in advance, but they factor into your overall profit and should be included when calculating your bottom line.

6. Capital Gains Tax (If Applicable)

If the property is not your principal residence, such as a rental property or commercial building, you may owe capital gains tax on the profit earned. This is calculated as 50% of the gain being taxable at your marginal tax rate. You should speak with your accountant or tax advisor to understand how this applies in your situation.

7. Title Issues or Insurance (Occasionally Required)

Although the buyer typically purchases title insurance, in rare cases, sellers may need to clear a title issue that arises during the transaction. These costs vary based on the situation.

How to Estimate Your Net Proceeds

To calculate your approximate net proceeds, use the following formula:

Sale Price
– Real Estate Commission (plus HST)
– Legal Fees
– Mortgage Payout and Discharge Fees
– Estimated Adjustments (taxes, utilities, condo fees)
– Any Other Costs (repairs, staging, etc.)
= Approximate Net Proceeds

We recommend running these numbers before listing to ensure you’re financially prepared and that selling supports your next move. If the final numbers are too tight, it might be worth waiting or exploring other options.

The information on this page is generic and non-specific to your sale. Therefore, if you need help with accurately calculating your estimated net proceeds, just reach out. We’ll be happy to run the numbers with you so you can move forward with confidence.