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Finances After Selling Your House in Canada | What To Do With the Proceeds

Updated

Finances after selling your house

A home sale usually produces the largest single deposit most people ever receive, and the decisions about it come quickly: what to pay off, where to park it, and how much to keep for the next home. This page covers when the money arrives, what is deducted from it, the tax reporting, and the ways sellers commonly use the proceeds. It is part of our guide to life stages and life events. How to sell (pricing, listing, offers) is covered in how to sell a house in Canada.

When do you get the money?

On closing day, the buyer’s lawyer or notary sends the purchase funds to yours. Your lawyer pays off the mortgage and the real estate commission and any other amounts owing from those funds, then releases the balance to you, usually on closing day or shortly after, once the transfer is registered. What happens on the day is covered in what to expect on closing day.

What comes off the sale price

ItemWhat happens
Mortgage dischargeThe outstanding balance is paid from the proceeds
Prepayment penaltyCharged if you break a mortgage term early
Real estate commissionNegotiable; deducted at closing. Payotte’s industry survey puts the national average at 4.09% of the sale price; see the commission calculator
Legal fees and disbursementsYour lawyer’s or notary’s bill for the sale
AdjustmentsProperty tax, utilities or condo fees prepaid or owing, settled with the buyer
Net proceedsWhat is released to you

Your lawyer gives you a statement of adjustments and a trust ledger showing every amount.

Reporting the sale: the principal residence exemption

The gain on a home is tax-free for each year you designate it as your principal residence: you or your family must have ordinarily lived in it that year, a family can designate only one home a year, and you report the sale on Schedule 3 and Form T2091; the exempt share is the years designated (while resident in Canada), plus one if you were resident in the year you bought it, divided by the years owned.

The gain may be partly taxable if you rented out part of the home, rented the whole home for some years, or used part of it for a business. Those cases, and how the designation works when a family owns two homes, are covered in the principal residence exemption guide and capital gains when selling a home.

What to do with the proceeds

Step 1: the next home and immediate costs

If you are buying again, the down payment often goes straight from one lawyer’s trust account to the next purchase; selling before buying covers the timing. Otherwise, set aside temporary housing and moving costs (see moving costs in Canada) and top up an emergency fund.

Step 2: high-interest debt

Credit card balances, lines of credit and personal loans cost more than most savings earn, so paying them off is a guaranteed saving equal to their interest rate. Lower-rate debts such as student loans are a closer call.

Step 3: registered accounts

AccountRoom
TFSAAll unused room since you became eligible ($109,000 for someone eligible every year since 2009)
RRSPUnused deduction room, shown on your notice of assessment; most useful in a high-income year
FHSAOnly for first-time buyers, so usually not available to someone who just sold a home they lived in

Step 4: investing the rest

How to invest a large lump sum (all at once, or spread over several months), and where to hold it while you decide, is covered in finances after winning money, which applies to any windfall. Money needed within a year or two usually stays in a high-interest savings account or GIC; see the best savings accounts.

Selling and renting

Some sellers, especially near or in retirement, rent afterwards and invest the proceeds. Property tax, home insurance and maintenance stop, but rent starts, and the comparison depends on local rents and returns. That decision is covered in selling your home and renting in retirement.

Key dates after selling

WhenWhat to do
Closing dayCheck the statement of adjustments with your lawyer
The weeks afterMove the proceeds somewhere that pays interest while you decide
Year endNew TFSA room is added on January 1; RRSP contributions count for the year if made within 60 days after it ends
Your tax return for the year of saleReport the sale on Schedule 3 and Form T2091

Sources

The figures and rules on this page come from these sources, last checked against them between August 29, 2026 and September 29, 2026. How we check facts.