How Long After Buying a House can I Sell It?

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Buying a home is usually approached as a long-term decision, but life doesn’t always follow the timeline you had in mind.

A new job could take you somewhere else. Your family might need more space sooner than expected. Your financial situation could change. Or, after living in the home for a while, you may simply realize it isn’t the right fit.

Whatever the reason, you may find yourself asking: How long after buying a house can I sell it?

The simple answer is that there is generally nothing stopping you from selling a home shortly after buying it. The bigger question is whether selling makes financial sense once you consider your mortgage, selling costs, potential tax implications, changes in property value and your individual circumstances.

Here’s what Ottawa homeowners should consider if selling is happening sooner than planned.

Can I Sell My House After One Year?

Yes, you can sell a house after one year, or potentially even sooner. There isn’t a standard waiting period that requires you to own a home for a certain number of years before putting it back on the market. However, selling soon after buying can come with additional financial considerations.

When you purchased the property, you likely paid closing costs such as legal fees, land transfer tax and moving expenses. Selling brings another set of costs, which can include real estate commission, legal fees, moving expenses and potentially costs associated with your mortgage.

If the property hasn’t increased enough in value to offset some of those expenses, you could walk away with less equity than you expected. That doesn’t mean selling is the wrong decision. It simply means it’s worth understanding the numbers before putting up the For Sale sign.

Need more tips for selling a home? Check out these other blog posts next!

Will I Pay Capital Gains Tax If I Sell My Home?

Selling your home shortly after buying it doesn’t automatically mean you’ll owe capital gains tax. In Canada, if a property qualifies as your principal residence, you may be able to claim the principal residence exemption when you sell. Generally, if the property was solely your principal residence for every year you owned it, you won’t have to pay tax on the gain. The sale still needs to be reported on your income tax return.

What is the Principal Residence Exemption?

There are important exceptions, particularly when a property wasn’t solely your principal residence or was also used to earn income. The circumstances surrounding the purchase and sale can also affect how the CRA treats any profit from the sale, including whether the property was originally purchased with the intention of reselling it for a profit.

There are also specific rules for residential properties sold after being owned for less than 365 consecutive days. Depending on the circumstances, a gain from the sale may be treated as business income rather than a capital gain. Certain qualifying life events can provide exceptions to this rule.

Tax treatment depends on the details of your individual situation, so if you’re selling soon after buying, it’s a good idea to speak with an accountant or qualified tax professional about what applies to you.

Can You Sell a House With a Mortgage?

Yes. In fact, most homeowners who sell their homes still have a mortgage.

When the sale closes, the proceeds are generally used to pay off the remaining mortgage balance, along with other applicable costs associated with the sale. Any remaining equity belongs to the homeowner.

Where things can become more complicated is when you’re selling before the end of your mortgage term. Depending on the type and terms of your mortgage, you may face a prepayment penalty for breaking it early. In other situations, you may be able to transfer (or “port”) your existing mortgage to another property.

Before deciding to sell, it’s a good idea to speak with your lender or mortgage broker so you understand your remaining balance, potential penalties and the options available to you.

Have more questions about selling your home? Check out these other blogs from our team!

What Happens If You Sell a House Within Five Years?

You may have heard that you should stay in a home for at least five years before selling, but five years isn’t a requirement.

The idea is largely based on giving homeowners time to build equity through mortgage payments and potentially benefit from changes in property value. If you sell sooner, whether it makes financial sense depends less on the number of years you’ve owned the home and more on your mortgage balance, selling costs and what the property is worth today.

In this scenario, it’s a still always recommended to discuss your options with your mortgage professional in order to ensure you are well informed about any potential penalties, and you can make the best decision for your situation.

Start With Your Home’s Current Market Value

If you’re considering selling sooner than expected, one of the first things to understand is what your home could realistically sell for today. Try not to start with the amount you need to get from the sale or assume that the price you paid is still its current value.

Real estate markets can change, even within a relatively short period. Conditions can also vary between neighbourhoods and property types. Here in Ottawa, we regularly see differences between the market for condos, townhomes, detached homes and rural properties (even when they’re located relatively close to one another).

Looking at recent comparable sales and current competition will give you a much clearer picture of where your property sits today.

Moving Up Sooner Than Expected

Not every early sale is prompted by a difficult situation. Sometimes, homeowners simply outgrow their first purchase faster than expected. Maybe you need more space, your commute has changed or the home simply doesn’t suit your life as well as you expected. In this situation, it’s important to look at the sale and purchase together.

Selling for more than you originally paid is only one part of the equation. You’ll also want to understand how much equity you’ll have available after selling costs and your mortgage are accounted for, along with what your next home is likely to cost.

Depending on market conditions, the price difference between property types can matter just as much as the value of the home you’re selling.

What If Your Circumstances Have Changed?

Sometimes selling isn’t part of a carefully timed move-up plan. A job change, separation, relocation or other unexpected circumstance can mean selling sooner is simply the most practical option.

When plans change, understanding your financial position can help bring some clarity to the decision. Your likely sale price, mortgage payout and selling costs can all help determine what moving forward might look like. If you’re concerned the proceeds from selling may not be enough to cover what you owe, it’s important to speak directly with your lender and appropriate professional advisors before making any decisions.

Of course, there’s also the part that doesn’t fit neatly into a spreadsheet. If a home no longer works for your life, staying simply because you haven’t owned it for an arbitrary number of years may not always be the right answer.

Thinking About Selling Earlier Than Planned?

You don’t need to have everything figured out before talking to a REALTOR®.

A good first step is understanding what your home is worth in the current Ottawa market. From there, you can consider the financial side of a potential sale with your lender, lawyer, accountant or other advisors — and decide what makes the most sense for you.

If selling has come up sooner than expected, The Wright Team would be happy to help you understand your home’s current value and talk through your options.

Ready to start your selling journey? We’d be honoured to help.
Call 613-692-0606 to get in touch, or reach us by email at info@ottawahomes.ca.