What Does It Cost to Sell a Home in BC? A Guide for Okanagan Sellers
šĀ Estimated reading time: 8 minutes
When homeowners start thinking about selling, one of the first questions is usually:
How much is it actually going to cost me to sell?
Real estate commission is the expense most people think of first, but it isn't the only amount that can affect what you walk away with.
There may also be legal or notary fees, mortgage costs, property tax adjustments, preparation expenses, moving costs and, depending on your circumstances, tax considerations.
The good news is that many of these costs can be estimated before you list.
When I'm helping a seller, I want them to have a realistic idea of their expected net proceeds ā not just the potential selling price.
For a broader look at the entire selling process:
Selling Your Home in the Central Okanagan: A Complete Guide
The Main Costs to Expect When Selling
Every sale is different, but the costs that may come into play include:
- Real estate commission and GST
- Legal or notary fees
- Mortgage discharge costs
- A possible mortgage prepayment penalty
- Property tax and other closing adjustments
- Cleaning, repairs or preparation
- Staging, depending on the property
- Moving and storage
- Strata-related costs, if applicable
- Property-specific costs for acreages, wells, septic or leasehold properties
- Potential tax implications in certain circumstances
You won't necessarily have all of these.
Some are predictable, while others depend entirely on the property, your mortgage and your personal situation.
Let's go through the ones sellers are most likely to encounter.
Real Estate Commission
There is no commission rate set by law in BC. Real estate commissions are negotiable and are agreed upon between the seller, REALTORĀ® and brokerage. Research Package What Does It Cā¦
Commission may be calculated using a percentage, tiered structure, flat fee or another agreed arrangement.
Your listing agreement should clearly explain how the commission will be calculated and what you've agreed to pay.
Depending on the arrangement, part of the commission may also be offered to the brokerage representing the buyer.
Don't Forget the GST
GST is added to real estate commission.
So if the total commission calculated on a sale were $30,000, the calculation would look like this:
Commission: $30,000
5% GST: $1,500
Total commission + GST: $31,500
The GST is therefore an additional amount rather than being taken out of the $30,000 commission. Research Package What Does It Cā¦
This is one reason I prefer to look at a seller's estimated net proceeds, rather than focusing only on the sale price.
Legal or Notary Costs
A lawyer or notary generally handles the legal side of completing the sale.
That can include preparing the necessary transfer documents, preparing the statement of adjustments, paying out and discharging a mortgage and dealing with the funds at completion. Research Package What Does It Cā¦
The cost varies depending on the firm and the complexity of the transaction, so I wouldn't use a generic online estimate as though it applies to every sale.
A straightforward freehold sale may be different from a property involving multiple charges, a strata, acreage or leasehold interest.
Mortgage Payouts and Prepayment Penalties
If you still have a mortgage when you sell, your mortgage will normally need to be paid out as part of the closing process.
There can also be fees associated with discharging it.
But the potentially larger cost to watch for is a mortgage prepayment penalty.
If you're selling before your mortgage term ends, your lender may charge a penalty. How that penalty is calculated depends on your mortgage and lender.
Factors can include:
- Whether the mortgage is fixed or variable
- Your outstanding balance
- How much time remains in the term
- Your contracted interest rate
- Current interest rates
- Your lender's particular calculation method
For many fixed-rate mortgages, the penalty may involve the greater of three months' interest or an interest rate differential. Variable-rate mortgage penalties are commonly based on three months' interest, although the actual terms of your mortgage control. Research Package What Does It Cā¦
Rather than trying to calculate this yourself online, I'd recommend asking your lender for a written payout and penalty amount.
It's also worth asking whether your mortgage can be ported to another property if you're planning to buy again.
A mortgage penalty can sometimes be a meaningful enough expense that I want sellers to know about it early rather than discover it just before closing.
Property Taxes and Other Closing Adjustments
Property taxes can look like another selling expense on your statement of adjustments, but they're really an accounting adjustment between you and the buyer.
For example, if you've already paid the property taxes for the year but sell partway through it, the buyer may reimburse you for the portion covering the period after the adjustment date.
If the taxes haven't yet been paid, the adjustment can work the other way.
Similar adjustments can occur with strata fees and certain prepaid expenses. Research Package What Does It Cā¦
Your lawyer or notary handles these calculations as part of the closing process.
Preparing Your Home for Sale
This category varies enormously.
One seller may need little more than a good clean and some decluttering.
Another home may benefit from painting, repairs, landscaping or professional staging.
Possible preparation costs include:
- Cleaning
- Window washing
- Paint and touch-ups
- Minor repairs
- Landscaping
- Carpet or upholstery cleaning
- Junk removal or storage
- Staging
- A pre-listing inspection, if you choose to have one
Before spending money, I recommend deciding what actually makes sense for your particular home and market.
I don't want sellers renovating simply because they assume that's what they're supposed to do.
Sometimes fixing a few maintenance items and presenting the home beautifully makes far more sense than completing a major renovation immediately before selling.
I've covered this in much more detail here:
Preparing Your Home for Sale in Kelowna: What Actually Matters
What About Photography and Marketing?
This is something I'd ask about when you're choosing a REALTORĀ®.
Professional photography, video, drone photography, floor plans, 3D tours, staging advice and other marketing services may be included as part of the listing service, depending on the REALTORĀ® and property.
If something is important to you, ask what's included before you sign the listing agreement.
You shouldn't simply assume that every REALTORĀ® offers the same marketing package or that every service will be an additional seller expense.
Moving and Timing Costs
Moving itself is easy to forget when calculating the cost of selling.
Depending on your situation, you may need to budget for:
- Professional movers
- A moving truck
- Packing supplies
- Storage
- Temporary accommodation
- Pet care
- Cleaning after moving out
Timing can also create costs.
If you're buying your next home before the proceeds from your current sale are available, you may need to discuss options such as bridge financing with your lender or mortgage professional.
If your sale and purchase dates don't line up neatly, temporary accommodation or storage can also become part of the equation.
Extra Costs When Selling a Strata Property
Selling a condo or townhouse can involve some additional expenses and adjustments.
There may be costs associated with obtaining required strata documents, and any outstanding strata fees, fines or other amounts owing may need to be dealt with.
Special levies also deserve attention.
Depending on when a special levy was approved, when its instalments are due and what the Contract of Purchase and Sale says, responsibility can fall differently between buyer and seller. Research Package What Does It Cā¦
This is one reason I like to understand what's happening with the strata before we list rather than waiting until an offer arrives.
For the full strata-selling process:
Selling a Strata Property in the Central Okanagan: What Sellers Need to Know
What About Acreages, Wells and Septic?
Rural and acreage properties can have additional considerations.
Depending on the property, buyers may want information about:
- Well records
- Water quality or flow testing
- Septic systems
- Septic maintenance or pump-out records
- Water licences
- Outbuildings
- Permits for additions
- Surveys or boundaries
- Older mechanical systems
Not every seller will need to pay for testing or inspections before listing. Some of these items may instead become part of a buyer's due diligence or conditions.
The important thing is identifying potential issues early so they don't become a surprise halfway through a transaction.
What About Leasehold Properties?
Leasehold sales can have different processes and potential fees depending on the particular lease.
There may be assignment or administration fees, lessor requirements or approvals, and other costs specific to the lease.
That's particularly relevant in parts of the Central Okanagan where leasehold ownership is more common.
I've covered the basics of leasehold ownership here:
Leasehold vs. Freehold Property in the Okanagan
Will You Pay Tax When You Sell Your Home?
This is where the answer becomes very property- and owner-specific.
Your Principal Residence
If your home qualified as your principal residence for every year you owned it, the gain is generally covered by the principal residence exemption.
However, you still need to report the sale and designate the property as your principal residence on your tax return for the year of sale. Research Package What Does It Cā¦
Things become more complicated if the property:
- Wasn't your principal residence for the entire time you owned it
- Was a rental or investment property
- Was a recreational or secondary property
- Had significant income-producing use
- Had a change in use
- Had capital cost allowance claimed
- Was owned for a relatively short period
Those are situations where I would recommend speaking with an accountant rather than trying to determine the tax treatment from a general real estate article.
Federal Property-Flipping Rule vs. BC Home Flipping Tax
These are two separate rules, which is important because they're easy to confuse.
Federal Residential Property-Flipping Rule
Under the federal rule, profit from selling certain residential property owned for less than 365 consecutive days can be treated as business income rather than a capital gain.
There are exceptions for certain life events and circumstances. Research Package What Does It Cā¦
BC Home Flipping Tax
BC has a separate Home Flipping Tax that can apply when residential property is sold after being owned for less than 730 days.
For properties sold within the first 365 days, the tax rate can be 20% of taxable income from the sale. It then decreases over the remainder of the 730-day period until reaching zero. Various exemptions may apply. Research Package What Does It Cā¦
Because the federal and provincial rules are different ā and because exemptions can depend on individual circumstances ā anyone considering selling relatively soon after purchasing should speak with an accountant or other qualified tax professional.
Do Sellers Pay GST on the Sale of a Home?
For a typical resale of an owner-occupied home, GST generally doesn't apply to the sale price.
There are situations where GST can apply, however, including certain new homes, substantially renovated properties, builder sales or properties connected with business activity. Research Package What Does It Cā¦
If there's any uncertainty about whether GST applies to a particular property, this is something to confirm with an accountant or lawyer before listing.
Remember, this is separate from the 5% GST charged on real estate commission, which we discussed earlier.
What Sellers Usually Don't Pay
There are a couple of costs sellers sometimes assume they'll have to cover but normally don't.
Property Transfer Tax
BC Property Transfer Tax is generally a buyer expense, not a seller expense. Research Package What Does It Cā¦
The Buyer's Home Inspection
The buyer normally pays for their own home inspection.
If you decide to have a pre-listing inspection completed before putting your home on the market, that's different ā you would pay for the inspection you ordered.
So, How Much Will You Actually Walk Away With?
This is the number I think is much more useful than trying to find an online answer to:
āWhat percentage does it cost to sell a home?ā
There isn't one percentage that works for everyone.
Instead, we can estimate your likely net proceeds.
A seller net estimate can account for things such as:
Expected sale price
minus real estate commission + GST
minus estimated legal/notary costs
minus mortgage payout
minus possible mortgage penalty
plus/minus closing adjustments
minus other known property-specific costs
= Estimated net proceeds
That gives you a much more meaningful number to work with.
And once an offer comes in, those numbers can be updated using the actual offer price and closing dates.
Meghan's Local Insight
I think sellers sometimes focus so much on what their home might sell for that they forget the other half of the equation:
What will you actually have left after the sale?
That's particularly important if you're selling one home to buy another.
Before making decisions about your next purchase, I want you to have a realistic idea of your expected proceeds ā including commission and GST, your mortgage payout, any potential penalty and the other costs we know about.
I also don't want you spending thousands preparing a property simply because an online checklist told you to renovate before selling.
We'll look at the home, the market and the likely buyer first.
Some costs are worth taking on. Some aren't.
The goal isn't simply to get the highest possible sale price at any cost. It's to make informed decisions about the overall financial outcome of the sale.
Frequently Asked Questions
Is there a standard real estate commission in BC?
No. Real estate commission isn't set by law in BC and is negotiable between the seller, REALTORĀ® and brokerage. Research Package What Does It Cā¦
Is GST added to real estate commission?
Yes. GST at 5% is charged on top of the agreed real estate commission. Research Package What Does It Cā¦
Will I pay capital gains tax when I sell my home?
If the property qualified as your principal residence for every year you owned it, the gain is generally covered by the principal residence exemption, although the sale still needs to be reported.
Rental, investment, recreational and other situations can be different, so speak with an accountant about your circumstances.
What if I sell less than two years after buying?
The BC Home Flipping Tax can potentially apply to residential property sold within 730 days of purchase, while a separate federal property-flipping rule can apply to certain sales within 365 days.
There are exemptions under both systems, so speak with a tax professional before assuming either applies or doesn't apply to you.
Will I have a mortgage penalty when I sell?
Possibly. It depends on your mortgage terms and timing. Ask your lender for a written payout and penalty figure and whether your mortgage can be ported to another property.
Who pays for the home inspection?
The buyer normally pays for their own inspection. If a seller chooses to order a pre-listing inspection, the seller pays for that inspection.
What extra costs can come with selling a strata property?
There may be document costs, outstanding strata amounts, closing adjustments and potentially special-levy considerations. The specifics depend on the strata and the sale.
How do I know what I'll actually walk away with?
Ask for an estimated seller net sheet before listing. It can then be updated once you have an actual offer so you have a clearer picture of your expected proceeds.
Continue Exploring
Selling Your Home in the Central Okanagan: A Complete Guide
Preparing Your Home for Sale in Kelowna: What Actually Matters
What Do Sellers Have to Disclose When Selling a Home in BC?
Selling a Strata Property in the Central Okanagan: What Sellers Need to Know
Leasehold vs. Freehold Property in the Okanagan
Thinking About Selling?
If you're considering selling a home in Kelowna, West Kelowna, Lake Country or elsewhere in the Central Okanagan, we can start by looking at both your property's potential market value and what your estimated proceeds could look like after the sale.
I can prepare a personalized seller net proceeds estimate for you, including estimated commission and GST, mortgage payout, legal costs and other expenses that may apply to your property.
That way, you're making your next decision with a much clearer picture of the numbers.
Have questions about what it might cost to sell your home? Get in touch ā I'm always happy to chat. š”
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