KARAKTER Realty · Calgary Downsizing

Your equity release breakdown: what a Calgary downsize frees up

The equity release breakdown, in five lines

Start with the sale price and take off five things. What is left is your real number, the cash the move puts in your hands. Work it out before you list, because it decides what you can buy and how you hold the rest.

1. Selling costs

Commission, the 5% GST on it, legal on the sale, and the $50 Land Titles discharge. At the traditional Calgary rate (7% on the first $100,000 and 3% on the balance), with $1,500 of legal, a $1.15M sale comes to about $42,000, or 3.7%. Commission is negotiable, so the net proceeds calculator and the downsizing analyzer both let you enter the rate you agree to; left blank, they use the traditional rate.

2. The mortgage payout and any penalty

The balance owing on closing day, plus a prepayment penalty if you break a term early. Ryan is a REALTOR®, not a mortgage broker, so this number comes from your lender. Ask for a payout statement dated for your closing day. If your term ends shortly before you plan to sell, ask your lender about renewing into an open term, which carries no prepayment penalty.

3. Getting the house ready

Paint where it is tired, visible repairs, a deep clean, and clearing. Ryan walks the house with you and tells you what is worth fixing and what to leave for the buyer; kitchen and bathroom renovations rarely return what they cost before a sale. The guide to preparing a long-held home goes room by room.

4. The buy side

The smaller home’s price, less any mortgage you choose to carry, plus Alberta closing costs: legal, a condo document review, title insurance, and the land titles fee ($50 plus $2 for every $5,000 of value, so $310 on a $650,000 condo). Alberta has no land transfer tax, so about 0.8% of the price covers most purchases. The condo document review checklist lists what to read before you firm up, and the closing costs calculator itemizes the rest.

5. The move

Movers, storage for anything you have not decided on yet, and the overlap if you own both homes for a few days. A long possession or a rent-back on the sale can shrink the overlap to nothing; possession dates and rent-backs explains how.

The breakdown, worked through

A $1.15M Calgary house with $150,000 owing, sold to buy a $650,000 condo outright. The example assumes the mortgage term ends at closing, so there is no penalty.

Run your own numbers in the downsizing analyzer, which does this in one screen and shows the monthly cost of each home beside it.

The monthly number matters as much as the lump sum

A downsize also changes what it costs to live each month. Property tax on a $650,000 condo is lower than on a $1.15M house, utilities usually drop, and exterior upkeep largely moves to the condo corporation. Condo fees replace much of that, and they rise over time.

Compare the full monthly cost of each home, mortgage payment included. A family paying $900 a month on the house mortgage plus $1,250 in tax, utilities, insurance, and upkeep spends $2,150. If the condo costs $1,050 a month all in with no mortgage, the move saves about $1,100 a month, or $13,200 a year. That annual figure belongs in any retirement plan alongside the lump sum.

Buy outright or keep a small mortgage?

Many downsizers buy the smaller home outright. No payment, no renewal, and a home that is fully theirs. Others keep a modest mortgage on purpose, to leave more of the released equity invested or available for family.

Which is better depends on your mortgage rate against what the money earns, your income in retirement, and how much certainty you want. That is a financial planning question, so Ryan gives you the housing numbers and your advisor runs the rest. Keep in mind that qualifying for a new mortgage depends on your income at the time you apply, which can be harder after you retire.

Helping family with the proceeds

A common use of released equity is helping an adult child buy a first home. Canada has no gift tax on a cash gift, but the child’s lender will usually want a signed gift letter confirming the money does not have to be repaid, and the funds often need to sit in the child’s account before closing.

Gifts and loans to family also touch your estate plan. If you intend a gift to be an early inheritance, or a loan to be repaid, write it down with your lawyer so siblings are treated the way you intend. Ryan coordinates the timing so the gift is available when the child’s purchase needs it.

Tax on the sale and on what comes after

If the house was your principal residence for every year you owned it, the gain on the sale is usually fully exempt under the Principal Residence Exemption. You still report the sale on Schedule 3 of your T1 return. The capital gains and PRE guide covers the exceptions.

Money you invest after the sale is a different story. Interest, dividends, and gains it earns are taxable in the usual way and can change your income in retirement. Talk to your accountant before the money lands.

This page is for general information only and does not constitute legal, tax, or financial advice. Always engage qualified professionals (mortgage broker, lawyer, accountant, financial planner) for your specific situation. KARAKTER Realty is licensed under RECA.

Updated 2026-10-23