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DOMINION LENDING CENTRES OUR HOUSE WINTER 2018 41 ISTOCK Realtor's rate is five per cent. In this example of a $1-million home, the agent would get $50,000. » Closing costs and legal fees – Approximately $1,500. » Miscellaneous costs – $1,000. This leaves you with approximately $747,500, and the approximate cost of selling your home at $52,500. In addition to these expenses, these are some other costs that are associated with downsizing: » The cost to prepare your home for the sale – fresh coat of paint, minor repairs, kitchen/ bathroom renovations, roof repairs and maybe even the cost to stage the home. » The cost to part with old furniture. When you downsize, you typically have to get rid of furniture, books and other items that take up space. You may even decide to keep the items in a storage unit, which can have ongoing costs. A typical 50-square-foot unit can range from $125 to $200 a month plus applicable sales taxes, a mandatory monthly insurance premium and a set-up fee or refundable deposit. Costs to buy your downsized home There are also costs associated with buying your new, downsized home. If you intend to purchase a smaller home (semi- detached, townhouse or condo), most of the money you earn from the sale of your home will go toward the purchase of your new home. And there are additional expenses here too. Let's use the example of a condo with a cost of $500,000, which is the average cost of a condo in Toronto. » The land transfer tax in Ontario for a $500,000 property is $6,475. Find out the property transfer tax in your province by visiting your provincial government website on land transfer taxes. » There may be a municipal land transfer tax (MLTT) in addition to the provincial tax. For instance, in Toronto, the MLTT for a $500,000 condo would be $5,725. Visit your municipality's website to find out the calculation for your MLTT. » Title insurance and legal fees – approximately $1,500. » Moving costs – about $2,000, or more if long distance involved. » There may be a property tax adjustment. This would depend on when the seller last paid the property taxes and when the buyer takes possession of the condo. In most cases, the buyer will have to pay the seller the dižerence depending on when they took possession of the property. If the seller is behind on payments, then the municipality requires the seller to pay ož the taxes from the proceeds of the sale. » Purchase of new furniture to fit the smaller condo – $10,000 to $15,000. » Monthly maintenance fee for condo living – approximately $500 per month or $6,000 a year. » This leaves you with approximately $221,800 from the sale of your $1-million home before you deduct the cost of condo maintenance fees at $6,000 a year. » And the additional cost to purchase your downsized home amounts to $25,700. » The total cost of downsizing from a $1-million home to a $500,000 condo would cost around $84,200 in your first year alone. Although you sold your $1-million home and downsized to a $500,000 condo, with all of the added expenses, you would only take home just over $215,800 after your first-year maintenance fees. This is the reality of downsizing. It isn't as clear-cut as the selling value of your home minus the purchase price of your downsized home. Although the transaction generates a cash return, the process of buying and selling incurs added costs that can make or break your decision to move. If you are downsizing because you need extra money to help finance your retirement, an alternative is obtaining a reverse mortgage. With a reverse mortgage, you can stay in your home and still have the extra cash to help you with your retirement. To find out how much money you can get with a reverse mortgage, talk to your Dominion Lending Centres mortgage specialist. If you decide to downsize, talk to your mortgage broker or a lawyer to find out your true cost of downsizing before making the final decision. YVONNE ZIOMECKI is senior vice- president, Marketing and Sales, for HomEquity Bank. DOWNSIZING If you are downsizing because you need extra cash to help you finance your retirement, AN ALTERNATIVE IS OBTAINING A REVERSE MORTGAGE. With a reverse mortgage, you can stay in your home and still have the extra cash to help you with your retirement.

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