For many BC homeowners, the house they raised a family in is now worth well over a million dollars and needs more work every year. Downsizing turns part of that value into money you can use, and swaps a roof, a garden and stairs for a strata fee and an elevator. For many people it's the right decision. But the numbers work differently from how they look on paper. Two sets of transaction costs, strata fees, and the price of the smaller home all eat into the release. And in 2026, a softer house market and firmer condo prices change the gap between the two. This guide works it through.
Is downsizing right for you?
Downsizing makes the most sense when two or more of these are true:
- The house is more work or more space than you want.
- Stairs, the garden or the commute are becoming harder.
- You want the money freed up for retirement, travel or family.
- You'd like to be closer to children, grandchildren, transit or services.
It makes less sense if you'd be moving mainly for money, and the numbers show a modest release. It also makes less sense if you'd give up a neighbourhood and community you'd miss, or if a suite or a live-in family member would solve the problem instead.
A useful test is to picture your day-to-day life in the smaller home in five years. If that picture is better, the money is a bonus. If it isn't, look at the alternatives first.
The real math
The equity you free up is not simply the difference between the two prices. On the way, you pay:
- Selling costs: commission and GST, legal fees, and any mortgage penalty. That's about $54,500 on a $1,850,000 house, at 7% on the first $100,000 and 2.5% on the balance.
- Buying costs: transfer tax (you're not a first-time buyer), legal fees, an inspection, and GST if the home is new. That's about $18,400 on an $899,000 resale condo.
- The move itself: decluttering, movers, new furniture sized for the new place, and often a few fixes. A $10,000 to $20,000 budget is common.
Selling a $1,850,000 house with no mortgage and buying an $899,000 resale condo releases about $863,000 in cash. That's about $88,000 less than the $951,000 difference between the prices.
Running costs fall too. On the default inputs, the house costs $19,400 a year in property tax, insurance, utilities and upkeep. The condo costs about $11,900, including a $520 monthly strata fee. That's about $7,500 a year less.
Invested at 4%, the released cash could produce about $34,500 a year.
The market matters. In 2026, detached house prices across Greater Vancouver and the Fraser Valley have fallen further from their peak than condo prices, and detached homes are selling more slowly. Since you're selling a house and buying a condo in the same market, the gap between the two is what counts, and it has narrowed. Price the house realistically, and don't wait for the old gap to come back before you act.
Choosing the next home
- Condo or townhouse? A condo usually means an elevator, one level, less upkeep, and often a concierge or secure entry. A townhouse keeps a front door and some outdoor space, but usually has stairs. Ground-level or "rancher" townhouses and single-level condos are in high demand from downsizers for that reason, and they hold their value.
- Location. Walkability to shops, medical services and transit matters more with each passing year. So does being near family.
- The building. Look at its age, how it's built and how well it's managed. Read the strata's depreciation report, its minutes and its insurance deductibles. A cheap strata fee in an older building can mean a special levy is coming.
- Age-restricted buildings. A 55+ building can still restrict rentals, which some owners like. But the pool of buyers is smaller when it's your turn to sell.
- Pets and parking. Check the bylaws before you fall for a unit. Pet limits, a second parking stall and storage are common surprises.
- Accessibility. Look for wide doorways, a walk-in shower, in-suite laundry and elevator access to parking. These matter if you plan to stay a long time.
Downsizing to another part of BC
Many Lower Mainland owners downsize and relocate at the same time, to the Fraser Valley, Vancouver Island, the Okanagan or the Sunshine Coast. The equity release can be much larger.
In August 2026, a Vancouver Island townhouse outside Victoria had a benchmark around $550,000. A BC Interior apartment was around $416,000. In Greater Vancouver, the equivalents were about $1,029,000 and $686,000.
Think through the trade-offs before you go:
- distance from family
- access to specialists and hospitals
- winter driving
- a smaller resale market if you ever need to move again
Rent in the new area for a few months first if you're unsure. Selling and buying twice is the most expensive mistake a downsizer can make.
BC's speculation and vacancy tax applies in many of these communities too. It only matters if you keep a second property there and leave it empty. Your new principal residence is exempt.
New build or resale?
A newly built home avoids transfer tax under BC's newly built home exemption, up to $1.1 million, with a partial exemption to $1.15 million. That applies to any Canadian citizen or PR who makes it their principal residence, not just first-time buyers. But it carries 5% GST, and the federal first-time buyer GST rebate isn't available to downsizers who've owned before. The standard new housing rebate only applies below $450,000.
At $899,000:
- A resale condo costs $15,980 in transfer tax and no GST.
- A new one costs $0 transfer tax, but $44,950 in GST.
Unless the new home is priced lower, has a warranty and features you value, or the builder is offering incentives, resale usually costs less to buy. Toggle "New from a builder" in the calculator to compare.
Presales can work for downsizers with time to wait, but they tie up a deposit for years and add completion risk. Many developers in 2026 have completed, unsold units at discounts, which gives you new construction without the wait. See our presale guide.
Timing the sale and the purchase
- Sell first, then buy. This is the safest option financially. You know exactly what you have to spend. Negotiate a long completion, or a rent-back from the buyer, so you're not forced into a hurried purchase.
- Buy first, then sell. This secures the home you want. You'll need to carry both or use a bridge loan. Some sellers will accept an offer subject to the sale of your house, usually with a clause that lets them keep marketing.
- Matching dates. Completing on the same day or consecutive days is common and workable with a good lawyer. Build in a few days' overlap for the move if you can.
Plan the move itself backwards from the date. Our seller's guide has a planner that works back from the day you hand over the keys.
Tax and benefits
- Capital gains. Selling your principal residence is normally tax-free. Report it on Form T2091. If you also own a cottage or rental, only one property per family can be designated as the principal residence for each year. Designating the one with the larger gain per year can save tax. Get advice before you sell either.
- Income from the released money. This is taxable. For those receiving Old Age Security, higher income can trigger the OAS recovery tax. Guaranteed Income Supplement and some provincial benefits are income-tested. How you invest the money, in a TFSA, a non-registered account or annuities, affects all of this. Talk to a financial planner before completion, not after.
- The home owner grant. On your new home it's up to $570, or up to $845 if you're 65 or older, in Metro Vancouver, the Fraser Valley and the Capital Region. Outside those areas it's up to $770, or $1,045. Apply every year.
- Transfer tax exemptions for first-time buyers won't apply. The newly built home exemption can.
If you'd rather stay: the alternatives
- Add a suite or laneway home. BC's small-scale housing rules allow a suite or accessory unit on most single-family lots. Rent it for income, or house family or a caregiver. It's often the most flexible choice. See the multiplex calculator for what a lot can hold.
- Property tax deferment. Owners 55 and older can defer property tax against their home's equity, with at least 25% equity required. But for taxes deferred from 2026 onward, interest is prime plus 2%, compounding monthly. Before 2026, it was prime minus 2%, simple interest. Balances already deferred keep the old terms. It's still useful, but it's no longer the near-free loan it was.
- A reverse mortgage. This lets you borrow against your home without monthly payments, repaid when you sell or die. Rates are higher than regular mortgages, and the balance grows. Compare the total cost over the years you expect to stay with the cost of downsizing.
- A home equity line of credit is cheaper, but it needs income to qualify and requires payments.
Helping family with the proceeds
Many downsizers want to help children buy their own first home.
- A cash gift isn't taxable in Canada, and lenders accept gifted down payments from parents with a signed gift letter.
- A loan, or putting your name on your child's title, affects their first-time buyer eligibility and your own tax and estate position. Take advice before choosing it.
- Keep enough for your own long-term needs. A gift can't easily be taken back.
See the first-time buyer guide for how gifts fit their programs.
The practical side
- Start sorting belongings months before listing. Room by room, decide: keep, give to family, sell, donate, discard.
- Measure the new home, and plan which furniture fits before the movers come.
- Consider a senior move manager or downsizing service if the job is large.
- Update your will, powers of attorney and representation agreement after the move. Addresses and assets change.
- Notify pension providers, CRA, Service Canada, MSP and ICBC of your new address.
- Keep the house insured and maintained until completion, and check it regularly if it's empty.
Mistakes we see
Counting the price difference as the money you'll free up. Two sets of costs come off it.
Pricing the house to 2022 values while buying the condo at 2026 prices.
Choosing a building with a low strata fee and an underfunded reserve.
Buying first without a plan for the gap if the house takes longer to sell.
Investing the proceeds without checking the effect on OAS and other income-tested benefits.
Relying on property tax deferment at the old rates. New deferrals now cost prime plus 2%, compounding.
Leaving the decluttering until the month of the move.
Questions people ask us
How much money will I free up by downsizing?
The price difference, minus selling costs (about 3% plus GST and legal fees), buying costs (transfer tax, legal fees, an inspection, and GST if the home is new), and moving costs. Selling a $1,850,000 house and buying an $899,000 resale condo releases about $863,000, roughly $88,000 less than the price difference.
Do I pay property transfer tax when I downsize?
Yes, on a resale home, because the first-time buyer exemption won't apply. On a newly built home up to $1.1 million, BC's newly built home exemption can remove it, if you're a citizen or PR and it's your principal residence. New homes carry 5% GST instead.
Is there capital gains tax when I sell my house to downsize?
Normally not, if it was your principal residence for every year you owned it. You must still report the sale on Form T2091. If you also own a cottage or rental, choosing which property to designate for which years can matter.
What changed with BC's property tax deferment in 2026?
For property taxes deferred for 2026 and later, interest is prime plus 2%, compounding monthly. Previously, the program for owners 55 and older charged prime minus 2%, simple interest. Balances deferred before 2026 keep their original terms.
Should I sell my house first or buy a condo first?
Selling first is safer financially, especially with a long completion or a rent-back. Buying first secures the home you want, but may need a bridge loan, or a purchase subject to your sale. Matching completion dates is common.
Will the money from downsizing affect my Old Age Security?
The sale of a principal residence is normally tax-free, so the sale itself doesn't count as income. But investment income from the proceeds does, and it can trigger the OAS recovery tax or reduce income-tested benefits. How you invest the money matters.
How much is the BC home owner grant for seniors?
Up to $845 a year for owners 65 and older in Metro Vancouver, the Fraser Valley and the Capital Region, and up to $1,045 elsewhere, on homes assessed up to $2.075 million in 2026. You must apply every year.
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Thinking about downsizing?
Dan can price your house against current sales, shortlist condos and townhouses that suit how you want to live, check their strata documents with you, and coordinate the dates so you move once. Your numbers come along with the message.
Start with a free home evaluation.
