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Canada - Selling Property
There are several different types of contract as everyone has different needs or expectations and not all contracts suit all sellers. One type of contract is the ‘Exclusive Right to Sell’ which means that your agent will list your property and sell directly, or it can be sold through another agent who brings their client to your home. If you happen to sell your home outside of the agent, for example through friends and word of mouth then your agent is still entitled to the commission fee. If the agent sells the home through another agent then they will share the commission fee. Either way as the seller you are obliged to pay the associated agency fees. The home is also listed on the Canadian MLS (Multiple Listing Service) which means that house hunters and agents countrywide will have access to the property details and this can increase the chance of a sale. This is also the most preferred type of contract for the agent as it means they have a better chance of earning a commission on the sale of your home.
An Open Listing means that your property can be signed up to more than one agency. You can also sell the property yourself. If an agent sells the home then the commission will be paid to them, however the fees are reduced due to the fact the agent will only be representing the buyer. Your home will not be listed on the MLS.
When a home is sold in Canada there is a capital gains tax due on the property. This is calculated on 50% of the gain. However, if you are a non-resident when you sell the home you will be required to pay an amount of around 25% of the estimated gain before selling. The seller’s lawyer will hold this money while a clearance certificate is issued. This can be obtained from the Canadian Revenue Agency and usually takes around 6-8 weeks to arrive. The certificate will not be issued until there is a contract of purchase and sale already agreed by both parties and any conditions stipulated with regard to the sale have been cleared (for example works on the property that are to be completed prior to sale).
Canada has a tax treaty with many other countries. This means that any income made from the sale of the Canadian home should only be taxed in Canada. For those moving to another country or those who pay taxes to another country will not be liable for a further tax payment on the money they make.
As with many countries Canada has seen a record breaking rise in housing prices. However, this began to slow down due to the world-wide recession. Despite this, Canada’s housing market has bounced back and has maintained a steady increase in the last couple of years. It is expected that the demand for homes will slow and therefore mean that housing prices will continue to be affordable. This is due to the fact many people are still feeling the effects of the financial crisis and are unwilling to commit to such big purchases. Most people are choosing to stay in their old homes rather than upgrade. Confidence in the market is expected to return and the effect of this should see house prices begin to rise steadily again.
At the current time property exchange is not a widespread option in Canada.
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