Downsizing Your Home in Retirement

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Selling your large family home to buy or rent something smaller can unlock hundreds of thousands of dollars for your retirement. Here is how to calculate it.

Downsizing Net Proceeds Calculator

Current Home Sale Price ($)

Remaining Mortgage Balance ($)

Realtor Commission (%)

Legal/Closing Costs ($)

New Home/Condo Purchase Price ($)

Moving + Renovation Budget ($)

Expected Annual Investment Return (%)

Number of Years in Retirement

Net Cash Released from Downsizing

Why Downsizing Is a Powerful Retirement Strategy

For many Canadian homeowners, the family home represents their single largest asset — often worth $500,000 to $2M+. After children leave, a 4-bedroom house becomes maintenance-heavy and expensive to heat/cool. Downsizing to a 2-bedroom condo or smaller home typically:

Releases $200,000–$700,000 in equity

Reduces property taxes, maintenance, and utilities by $10,000–$25,000/year

Eliminates accessibility barriers as mobility declines with age

Can fund 100+ additional years of retirement income

Principal Residence Exemption: When you sell your primary residence in Canada, the capital gain is completely tax-free under the Principal Residence Exemption — regardless of how much your home has appreciated. This is one of the best tax shelters available to Canadians.

Downsizing vs. Renting Out a Room vs. Staying Put

Option	Monthly Income Potential	Complexity
Sell and downsize	$1,500–$4,000/mo from proceeds	One-time transaction
Rent basement/room	$800–$1,800/mo rental income	Ongoing landlord responsibilities
Reverse mortgage	Access equity without selling	Moderate; accumulates interest
Stay put (home equity line)	Credit available but not income	Requires ongoing qualification

Option

Monthly Income Potential

Complexity

Sell and downsize

$1,500–$4,000/mo from proceeds

One-time transaction

Rent basement/room

$800–$1,800/mo rental income

Ongoing landlord responsibilities

Reverse mortgage

Access equity without selling

Moderate; accumulates interest

Stay put (home equity line)

Credit available but not income

Requires ongoing qualification

Downsizing Checklist for Canadian Retirees

Determine your "must-haves" in the new property (accessibility, healthcare proximity, family distance)

Research new location costs including property tax, condo fees, and utility estimates

Consult a financial planner about how to invest the freed equity (TFSA, GIC ladder, dividend ETFs)

Time the sale — Canadian real estate markets have seasonal peaks (spring/fall)

Understand condo fees: they can add $400–$1,500+/month depending on building

Check if the new location qualifies for the Multigenerational Home Renovation Tax Credit if moving near family

Handle Your Downsizing Proceeds With KOHO

After downsizing, use KOHO's no-fee account to receive investment income and government benefits without paying monthly banking fees. Use code BREMO2026 to earn $100.

Open KOHO — Get $100