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Cost of selling a house in Quebec

Selling your home in Quebec comes with a few important costs that you should be aware of, in addition to the costs of making your property attractive to buyers. These costs include the fees associated with listing your home, as well as the fees associated with the sale itself, capital gain tax and, of course, the real estate broker’s commission. 

So, if you’ve decided to sell your home, it’s crucial to know the costs involved with selling your house in Quebec. Let’s find out. 

What Are Real Estate Commission Rates in Quebec?

Real estate commission rates in Quebec vary depending on many factors, including the type of property sold and the selling agent’s services. However, the average rate is typically 5%. Homeowners can negotiate the real estate commission with their agent, and most agents in Quebec are willing to accept a rate between 4-5%.

The commission rate is a percentage of the total sale price that goes to the real estate agent. It is negotiable and should be specified in your contract with your agent. You can search for a local real estate agent in Quebec and ask about the commission rate to compare. It’s vital to an experienced broker when selling a property in Quebec. 

Do you have to pay tax when you sell your home in Quebec?  

If a property is your principal residence you do not have to pay tax. However if the immovable property is not your principal residence , the sale will be considered as capital gains. When you sell or transfer a house in Quebec for a non principal residence, you generally have to pay taxes on half or 50% of the capital gains you made from the sale. If you designate the property as your principal residence, you may be able to avoid paying taxes on all or part of the capital gains.

How much tax do you pay when you sell a house in Quebec?

If you sell a house which is your principal residence you pay no tax at all. Otherwise The seller is required to file Form TP-1097-V, which includes supporting documentation to notify the government of a capital gain. In addition to any federal withholding tax, Quebec withholding tax is calculated as 12.875% of the capital gain. Even if the transaction results in a capital loss, nonresidents are required to get a clearance certificate.

How is capital gains tax calculated on property in Quebec?

The tax on capital gain is the revenue that Revenu Québec collects on the seller’s profit from the house deal or investment. However, as mentioned above, it doesn’t apply to the full gain; only 50% of the capital gains are taxable. The tax is kept to 50% by Revenu Québec to encourage investment and boost economic growth. If you make $20,000 from a proper sale, you will report $10,000 as a taxable capital gain. 

How to avoid Capital Gain Tax in Quebec? 

You cannot avoid capital gain tax entirely as it’s illegal. However, there are some ways you can use to reduce the tax on the capital gain in Quebec, like putting your profit in a tax shelter, taking advantage of the lifetime capital gain exemption, and donating your shares to charity. 

You can also avoid a large portion of capital gain tax with the help of home sale exclusion. This is basically a big tax break from Revenu Québec that allows people to sell their investment property. So, you can buy another home and defer your capital gains by rolling the sale of your previous house into the new one. 

Do you have to pay anti-flipping tax on a property in Quebec? 

Right now no , but if the proposed law passes , The answer will be a Yes.  On April 7th, 2022, the federal budget introduced this new tax policy called “anti-flipping tax.” This tax will apply to those homeowners or investors who own property for less than one year. 

With this policy, if you’re selling a house in Quebec within a year of owning it, then you will no longer qualify for the half capital gain tax policy and will have to pay in full 100% of the profit or gain. Furthermore, an individual can also lose his Principal Residence Exclusion if they buy a primary residence and sell it for non-exempt reasons.

What are the other costs involved when you sell a house in Quebec?

The Mortgage Fees

If you’re selling your house by paying off your mortgage before its maturity, some lenders may charge a certain penalty or interest. It’s essential to consult an experienced mortgage broker to discuss this matter.  

The Certificate of location 

Among the other important documentation, the certification of location is also a mandatory certification for selling a house in Quebec. As per article 2917 of the Civil Code of Québec, the owner is required to get a new certificate of location every 10 years, regardless of whether any changes have been made to the house. 

A certificate of location is a document or report produced by an authorized land surveyor. It contains all the information related to the state of the property and all the laws and regulations that may affect it. This document is obtained and paid for by the seller. 

The Notary’s fees 

The notary is decided on in the negotiations in the Promise to Purchase, although the buyer bears the notary’s fees in most cases. But in some cases, the seller also contributes in the amount, depending on the number of liens, i.e. legal mortgages or hypothec on the property. The cost can vary from $1000-$2000. You can find a notary near you in Quebec to transfer the possession of the house. 

Unpaid Property Tax 

The house owner in Quebec or the seller is required by law to pay any outstanding property taxes up to the time of the sale.

Inspection and repair cost 

It’s common practice for buyers to get an inspection report on the property they’re interested in, and often the sale is contingent on the findings of that report. That means that if there are any problems with the property, the seller may be on the hook for additional costs. 

So it’s a good idea to address any potential issues with your home before putting it on the market. The home inspection and repair cost can vary from $500-$1000, which is not mandatory but highly recommended. 

Cost of moving 

Sellers need to consider the costs of supplies, transportation and professional moving services, or if applicable, storage costs. 

If you are looking to sell your property and would like to know the current market value of your immovable, You can reach Alp Perez at 438- 722- 2676 or alpperez@royallepage.ca 

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