# The Real Profit on Selling Your Home

Last week we talked about the option of drawing money out of your RRSP to buy a home. Today, I wanted to talk about the other side, about someone selling their home. This example comes from a short story out of Moneysense magazine, and it’s really insightful.

Here’s a math quiz: If you bought your home for \$250,000 and sold it for \$450,000 ten years later, how much did you make? Almost all of us would say it turned into a \$200,000 profit. Well – no, not even close. The example assumes a 5% mortgage with a 10% down payment on the purchase. Here’s what’s missing from the equation, in rounded numbers:

-you have to subtract the original down payment money of \$25,000
-take off the \$4,000 legal fees for the purchase and sale
-deduct the mortgage interest for 10 years of \$160,000
-take off the \$2,200 land transfer tax at the time of purchase
-less an estimated \$19,000 spent on home maintenance
-there’s about \$22,000 of realtor fees from the sale
-and deduct the \$168,000 still owing on the mortgage

That leaves an actual profit of just under \$18,000. Quite different than thinking you’ve made \$200,000. Keep in mind you did have a place to live for a decade, but the real net profit is quite different than the sale proceeds.