What deductions can I claim when selling a home?
Want to keep thousands when you sell your Georgetown home? Read this first.
Cut the tax bill — simple, local, and legal
You’re selling a home in Georgetown, ON. That means one thing: mistakes cost real money. I’ll give you direct, practical steps to lower or eliminate taxes when you sell. No fluff. No fear. Just what works in Halton Hills and Ontario tax law.
The big picture: capital gains vs. principal residence
If the property was your principal residence for every year you owned it, you likely pay no capital gains tax. That’s the Principal Residence Exemption (PRE) — the largest single deduction for home sellers. But there are traps:
- If you ever used the home to generate rental income, run a business from it, or owned another property as your main home in the same years, you may not qualify for full PRE.
- You must report the sale on your tax return and designate the property as your principal residence for the years you claim.
Action: gather proof of occupancy (driver’s license, utility bills, voter registration) and keep it.
What deductions reduce your capital gain (and how to claim them)
In Canada, capital gains = proceeds of disposition minus adjusted cost base (ACB) and eligible expenses. Only 50% of a capital gain is taxable. Here’s what reduces that gain:
1) Real estate commissions and selling fees
- What: Realtor commissions, brokerage fees, and any selling fees you pay to sell the home.
- How it helps: These reduce the proceeds of disposition when calculating capital gains.
2) Legal fees directly related to the sale
- What: Lawyer fees for closing the sale, preparing the deed, or dealing with title issues.
- How it helps: Deductible against proceeds.
3) Advertising and marketing costs for the sale
- What: Premium listings, professional photography paid specifically to sell the home, targeted marketing costs.
- How it helps: These are selling expenses that reduce proceeds.
4) Home inspection/repair costs required to close the sale
- What: If you paid for inspections or repairs to meet a condition of sale, document them.
- How it helps: Some closing-related repair costs are treated as selling expenses. Distinguish between routine maintenance (not deductible) and sale-related repairs (may reduce proceeds).
5) Adjusted Cost Base (ACB) increases — capital improvements
- What: Capital renovations that add lasting value (additions, new roof, new furnace) increase your ACB.
- How it helps: Higher ACB lowers capital gain. Keep invoices and permits.
6) Costs to transfer title and discharge mortgage
- What: Mortgage discharge fees, title transfer costs tied to sale.
- How it helps: Often deductible as selling expenses.
7) Accounting or appraisal fees tied to sale price or ACB
- What: Appraisals used to set the sale price or support ACB calculations; accountant fees for tax filings that relate to the sale.
- How it helps: Can be deductible; keep receipts.
What you cannot deduct (don’t waste time)
- Cosmetic repairs and normal maintenance just to make the property sellable (unless specifically required for closing).
- Moving costs (unless eligible under income tax moving rules for employment).
- Interest on personal loans tied to the home sale.
Special local and Ontario issues every Georgetown seller must know
- HST: Most resale homes are HST-exempt in Ontario. HST applies to new homes or substantially renovated homes sold by builders or self-developers. If you’re selling a previously owned single-family home, HST typically does not apply.
- Land Transfer Tax: Paid by buyers at purchase, not sellers. But local market pricing and buyer costs can affect sale strategy.
- Estate sales and probate: If selling an estate property in Halton Hills, estate administration tax (probate fees) may apply before funds distribute. Settlement timelines can affect taxable year of disposition.
- Non-resident sellers: If you live outside Canada when you sell a Canadian property, the buyer usually withholds a portion of the sale price unless you provide a CRA clearance certificate. That’s a hard stop — plan ahead.
Rentals, short-term rentals, and part-time business use
If any portion of your home was used to generate rental income or short-term rental income (Airbnb), expect capital gains for the portion not eligible for PRE. Two things to track:
- Change of use: When you convert a principal residence to rental (or vice versa), you trigger a deemed disposition at fair market value. There are election options to defer tax, but rules are technical.
- Expenses and CCA: You cannot claim Capital Cost Allowance (CCA) on a property and still claim full PRE for the same years. Claiming CCA can trigger recapture when sold.
Action: talk to an accountant before claiming rental deductions or CCA.
What to do before you list — a practical checklist
- Collect purchase documents (agreement of purchase, closing statement) and receipts for any capital improvements.
- Gather invoices for repairs, staging, marketing, inspections, and legal bills related to sale.
- Confirm years of principal residence use and prepare documentation proving occupancy.
- If you ever rented part of the property, get rental agreements and income records.
- If you’re non-resident or think you will be at closing, contact a tax lawyer or accountant to start the CRA clearance certificate process.
How much can you realistically save? Numbers that matter
Say you bought your Georgetown home for $400,000, made $60,000 in capital improvements, and sell for $700,000 with $42,000 in commissions and closing fees. Your ACB = $460,000. Proceeds after selling costs = $658,000. Capital gain = $198,000. Taxable capital gain = 50% = $99,000. If you’re in a 30% combined tax bracket, tax = ~$29,700.
If you incorrectly omit $60,000 of capital improvements or fail to deduct $42,000 in commissions, your taxable capital gain rises dramatically. Documentation saves thousands. That’s real money for Georgetown sellers.
Filing the sale on your return — Canadian rules you must follow
- Report the sale on Schedule 3 of your T1 income tax return and complete Form T2091 (or its CRA equivalent) to designate the property as your principal residence.
- Since 2016, you must report the sale of your principal residence to claim the PRE. Failure to report can lead to reassessments.
- If the property was partially used for business or rental, include every relevant schedule and be ready to show calculations.
When to call a pro
- You used part of the home for business or rental.
- The property was inherited or transferred after a death.
- You’re a non-resident, or planning to move out of Canada before the sale closes.
- You flipped the house or are in the business of buying/selling real estate.
Hire a tax accountant with real estate experience. For legal closings, use a real estate lawyer experienced in Halton County transactions.
Hyper-local seller advantage — why Georgetown matters
Georgetown sits in Halton Hills with strong commuter demand to Toronto and growth pressure from the GTHA. Local buyers expect quality, and sellers can command premium pricing. But higher prices mean bigger capital gains risk if this isn’t your principal residence or was used as a rental. Local trends also mean faster sales and potentially larger marketing expense, which, when documented, reduces taxable proceeds.
If you want aggressive pricing and minimal tax hit, document everything, use a local realtor who knows Halton tax quirks, and run the numbers before you sign anything.
Contact for local help
When you’re ready to sell in Georgetown, get advice that saves you money. Call or email for a straightforward review of your situation and a local plan that minimizes tax and maximizes net proceeds.
Tony Sousa, Local Realtor — Georgetown, ON
Email: tony@sousasells.ca
Phone: 416-477-2620
Website: https://www.sousasells.ca
FAQ — Quick answers Georgetown sellers ask most
Q: Do I have to pay capital gains tax when I sell my primary home in Georgetown?
A: If you lived in the property as your principal residence for every year you owned it, you likely pay no capital gains tax. You must report the sale and designate the property as your principal residence on your tax return.
Q: Can I deduct my realtor commission when I sell?
A: Yes. Commissions and selling fees reduce the proceeds of disposition and lower capital gains.
Q: Are repair costs before sale deductible?
A: Routine maintenance is not. Repairs required to close the sale or costs tied directly to selling may be deductible. Document everything and ask your accountant.
Q: I rented a room on Airbnb for a few months — will that change my PRE?
A: Possibly. Short-term rental income can affect the portion of the home eligible for PRE. You may have a partial capital gain. Don’t claim CCA if you want to preserve PRE years.
Q: I’m moving out of Canada before I sell — what happens?
A: The buyer may be required to withhold a portion of the sale proceeds unless you obtain a CRA clearance certificate. Start the application early.
Q: What about HST on my sale?
A: Resale residential properties are generally exempt from HST. New builds or substantial renovations sold by a builder can be HST-applicable.
Q: How long should I keep records?
A: Keep records (receipts, permits, closing statements) for at least six years. Better: keep them indefinitely for major capital improvements.
Q: If I inherited the house, how is tax calculated?
A: The property’s ACB for the inheritor is usually the fair market value at the date of death. That reduces capital gains when you later sell. Speak to an estate lawyer and accountant for precise steps.
Q: Should I hire an accountant before listing?
A: Yes, especially if any rental, business use, inheritance, or non-residency applies. Small mistakes cost thousands.
Need a local, direct consultation for your Georgetown sale? Contact me: tony@sousasells.ca | 416-477-2620 | https://www.sousasells.ca
