Jun 17, 2026
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A couple in their early 60s sits at the kitchen table in the same four-bedroom house where they raised their kids. The mortgage is paid off, but the bills keep climbing: property taxes, repairs, insurance and utilities for rooms that now sit empty. The house is priceless and full of memories. But it is also costing an arm and a leg to maintain, and eating into their retirement income.
Such is the scenario that thousands of Canadians face in retirement. Does downsizing in retirement really help Canadians? Here’s how to do so without feeling regret and how much it can cost and save you in retirement.
What does downsizing actually mean for Canadian retirees?
Downsizing in Canada is the same as in most places: selling a larger, more expensive property and moving into something that better suits retirement.
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That could mean:
- A detached family home to a condo
- A suburban property to a townhouse
- A move from Toronto or Vancouver to a smaller city
- Transitioning into a retirement community
While downsizing tends to mean reducing the square footage of your home, that’s not always the case. The true goal for downsizing is to reduce the carrying costs and free up your equity.
According to Statistics Canada, most Canadians over the age of 55 still own their homes. This is the same group that has built significant wealth through rising real estate values over the last two decades. At the same time, CMHC has noted growing interest among older Canadians in lower-maintenance housing options as retirement approaches.
The key question is not “Should I downsize my home?” in the abstract. It’s whether your current home still fits your finances, lifestyle and long-term needs, no matter how difficult it may feel to sell it.
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What are the real costs of downsizing in Canada?
This is where many homeowners get caught off guard and realize they need to plan a true downsize accordingly.
The formula seems simple on paper: sell high, then buy a smaller property while pocketing the difference. But before you know it, transaction costs can eat into a lot of that profit.
On the selling side, typical costs include:
- Realtor commissions: usually 3% to 5%
- Legal fees: roughly $1,500 to $2,500
- Staging, cleaning and repairs
- Moving costs: often $2,000 to $10,000+
Then come the buying costs:
- Land transfer tax
- Legal fees
- Home inspection
- Condo document review or status certificate review
- Moving and setup expenses
These costs can be even higher in expensive markets like Ontario or B.C. The land transfer tax alone can make you want to reconsider the entire move.
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Here’s a realistic example of a couple downsizing in the Greater Toronto Area:
A couple sells a detached home for $900,000 and buys a condo for $580,000.
Breakdown of the sale of existing home
- Sale price: $900,000
- Realtor commission (4%): -$36,000
- HST on commission: -$4,680
- Legal fees and closing costs: -$2,000
- Repairs/staging/moving: -$12,000
Net proceeds after sale costs: about $845,000
Breakdown of the purchase of a condo
- Condo purchase: -$580,000
- Ontario land transfer tax: about -$8,000
- Legal fees and closing costs: -$2,000
- Moving/setup costs: -$5,000
Remaining equity: roughly $250,000
That’s a $70,000 difference from the $320,000 profit they made on paper.
Now, let’s say that the condo is a new build. That means the added HST for being the first owner can create another major cost. Even with a rebate, buyers should review and confirm the final tax implications before signing anything.
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There is a silver lining, though. If the property you are selling was your principal residence for every year that you owned it, then it is exempt from capital gains taxes on the sale. If it were used as a business or rented out, then it would be a different story. Consult a tax professional before deciding on downsizing your residence in retirement.
Don’t forget the hidden costs of staying put
The grass is not always greener on the other side. While most homeowners focus on the cost of moving, staying comes with its own set of costs.
Property taxes across Canada are rising each year, and as homes get older, they often need major repairs. Paying insurance and utility bills for large houses can also add up quickly.
For Canadian retirees, carrying costs can quietly consume thousands every month, even without a mortgage. This is the real cost of delay.
When is the right time to downsize?
There is no right or wrong time to downsize your home. It is personal and is triggered by things like age, income and health.
Financially, the ideal time to downsize is between 12 and 24 months before full retirement. You still have a high enough income for mortgage qualification if financing is needed, and there is more flexibility to wait for the right buyer or property.
As with most financial things, timing the housing market is risky. A better approach is to downsize when it benefits your finances or quality of life, even if it may not feel like the right time.
Common triggers for downsizing include:
- Adult children have moved out
- The home needs expensive repairs
- Mobility concerns are emerging
- Housing costs are limiting retirement savings
- Maintaining the property feels overwhelming
One tip is to sell before health issues become a factor. An urgent sale usually causes more stress and a worse financial outcome.
How do you downsize without losing your mind — or your equity?
The emotional side of retirement downsizing is often overlooked.
Most Canadians do not see their home as an asset. It is full of memories that can often cloud our judgment when it comes to selling.
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Try starting the downsizing process early. Begin decluttering six to 12 months before listing.
Before selling, you should also get an accurate evaluation of your home’s value. This can help in deciding on what you can afford to buy next.
Don’t add a major renovation; it will only add stress to your plate. A fresh coat of paint and some fixes can go a long way before showing your home to potential buyers.
Sell first or buy first?
This is always a difficult decision to make. It is the chicken-and-egg effect of downsizing homes.
Selling first gives financial certainty. Buying first helps to avoid feeling rushed into a purchase, but it can add the risk of not selling or selling for less than expected.
Some homeowners use bridge financing to buy before selling, but it comes with costs and time limits. A mortgage professional can help determine whether that approach makes sense.
Downsizing to a condo — what Canadians need to know
Condos seem like the ideal size for a proper downsize, but they come with their own costs.
Monthly condo or strata fees cover things like maintenance, insurance and amenities. These can rise over time and can be a surprisingly high cost to add on to your mortgage, taxes, insurance and utilities.
Have a reserve fund, especially in retirement. Condos can have a special assessment at any time and can be a crippling cost to owners.
Understand the difference between buying a new-build and a resale condo. New-builds come with HST and a potentially uncertain timeline for being move-in ready.
You should also be aware of stipulations like pet restrictions and rental rules. You never know who your neighbours might be.
A 12-step downsizing checklist for Canadian homeowners
- Run the real financial math, including all of the moving costs
- Get a professional home evaluation (at least two real estate agents)
- Speak with a tax professional about your principal residence exemption
- Contact a mortgage broker if financing may be needed
- Decide whether to sell first or buy first
- Begin decluttering six to 12 months early
- Focus on cosmetic updates instead of major renovations
- Research neighbourhoods and housing types carefully
- Review condo reserve funds and status certificates
- Hire legal representation for both transactions
- Plan moving logistics well ahead of time
- Update wills, powers of attorney and beneficiaries after moving
FAQs
At what age should you downsize your home in Canada?
There is no perfect age to downsize. Most Canadians may start to consider downsizing 5 to 10 years before retirement. Others will begin thinking about it when a major event happens, like adult children moving out or expensive home repairs arising.
Do you pay capital gains tax when you downsize in Canada?
Usually not, if the property qualified as your principal residence for every year you owned it. There can be taxes on the sale if it serves as a business or rental property. Consult a tax professional before considering a sale of your property.
How much money do you save by downsizing?
Every situation is different. It depends on the sale of your home and the cost of your new one, but carrying costs also apply. A typical downsize can reduce costs by $1,000 to $3,000 monthly, while also freeing up equity to generate retirement income.
What are the biggest mistakes people make when downsizing?
Underestimating the costs of downsizing is the biggest mistake made by most Canadians. Other mistakes can include trying to urgently sell your home, over-renovating before selling, or waiting too long before other issues, like health concerns, arise.
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Noel Moffatt is a Canadian fintech expert with a passion for simplifying personal finance. Based in St. John’s, NL, he draws on his background in finance, SEO, and writing to deliver clear explanations and actionable advice. Noel is dedicated to equipping readers with the knowledge and tools they need to make informed financial decisions, striving to make personal finance more accessible and understandable through his in-depth articles and reviews.
Managing Money • Jun 04
