Selling First or Buying First When You Downsize in Toronto

The short answer

The first real decision in a Toronto downsizing move is the order of the two deals: sell first or buy first. It decides whether you shop with a known budget, whether you might own two homes at once and how much pressure you are under when you price the house you are leaving.

For most downsizers, selling first is the lower risk order. Buying first is sound in a narrower set of situations. This post sets out both honestly, with the Toronto costs that come with each. Our downsizing guide for Toronto homeowners covers the rest of the move.

Why selling first is usually the safer order

A Toronto house held for many years is usually worth much more than the home that replaces it, so its sale price sets the whole budget. Until it sells, every number you plan around is an estimate.

Once the sale is firm, three things change. You know what you will actually walk away with after the mortgage, commission and legal fees. You can shop for the next home without an offer that depends on selling. And you are not pricing the old house under the pressure of having already bought.

The cost of selling first is equally clear: you have a closing date and possibly no confirmed place to go. That is solved with the closing date rather than with luck, which the next section covers.

Making the two closing dates work

Closing dates are negotiated in each offer and in a downsizing move they are the most useful lever you have.

A common sequence looks like this:

1. List with a longer closing date than a typical sale, which gives you time to search after the sale is firm.
2. Shop for the smaller home with the firm sale behind you.
3. Set the purchase to close a few days before the sale, so you can move directly from one to the other.

A short gap between the two closings is where bridge financing comes in. Some lenders offer it to cover the days when the purchase money is needed before the sale money arrives. Terms and eligibility vary, so ask your lender or a mortgage professional what they need to see. FSRA notes that in Ontario, anyone carrying out regulated mortgage brokering activities must be licensed with it unless exempted and it offers a search to check a licence.

When buying first is the right call

Buying first makes sense when the home you want is genuinely hard to find. TRREB’s August 2026 figures show why that can happen in Toronto. Across the whole City of Toronto that month there were 885 condo apartment sales but only 45 freehold townhouse sales. If you want a freehold townhouse or one particular building, waiting until your sale is firm may mean the right one is gone.

If you do buy first, go in with a plan:

• A written budget for carrying both homes for several months, including two mortgages if you have one, two sets of utilities and insurance and two property tax bills.
• A realistic value for your current house, based on comparable sales rather than hope. A home valuation is the place to start.
• The longest closing you can negotiate on the purchase, to give the sale time.
• An understanding that if prices soften while you own both, the difference comes out of your sale.

What carrying two Toronto homes costs

Carrying costs are where buying first hurts most and property tax is one you can estimate in advance. The City of Toronto’s 2026 total residential tax rate is 0.767311% of assessed value, made up of a City rate of 0.605295%, an education rate of 0.153000% and a City Building Fund rate of 0.009016%.

Illustrative assessed value	2026 residential property tax for a full year
$700,000	$5,371
$900,000	$6,906
$1,100,000	$8,440

These are illustrative values, not a quote for any property. Your own figure uses the assessment on your tax bill. Each month you carry the old house adds roughly one twelfth of its annual bill.

The Vacant Home Tax if the old house sits empty

Toronto adds a cost that many downsizers do not expect. The City’s Vacant Home Tax applies to a residential property that was vacant for six months or more during the taxation year. From the 2024 taxation year the rate is 3% of the property’s assessed value. On an assessment of $900,000, 3% would be $27,000.

Every residential owner must declare the property’s occupancy each year and the City assumes a property was vacant if no declaration arrives by the April 30 deadline. The City lists exemptions, such as the death of an owner or a principal resident being in hospital, long-term or supportive care for at least six months of the year. Whether a house that is empty while it is for sale qualifies for any exemption is a question to put to the City before the six months pass. It is also one more reason to keep any overlap short.

Land transfer tax is the same in both orders

Whichever order you choose, you pay land transfer tax once, on the home you buy. Ontario says the tax is paid when you acquire land and a property in the City of Toronto also pays the City’s municipal land transfer tax. Up to $2,000,000 the two taxes use the same brackets, so at $550,000, the August 2026 City of Toronto median for a condo apartment, each is $7,475 and together they are $14,950. Our Toronto land transfer tax calculator works out both for any price.

A third option: sell, rent, then buy

Selling and renting for a period is easy to overlook. It suits downsizers who are unsure where they want to land, who are thinking of moving closer to family elsewhere in the region or who want to try apartment living before committing. It removes the timing problem entirely, because you buy later with no house left to sell. The costs are two moves, storage for what does not fit in the rental and the chance that prices rise while you are renting.

Questions to ask before you commit to either order

Each professional involved can answer part of the timing question, so ask them before the first offer rather than after it.

• Your lender or mortgage professional: will you offer bridge financing, what do you need to see first and what will it cost for the gap I am planning.
• Your lawyer: how many days between the two closings are you comfortable with and what happens if one of them is delayed.
• Your brokerage: how long does the listing agreement last and does it include a holdover clause. RECO explains that such a clause can require you to pay the brokerage for a sale that happens after the agreement expires.
• The City of Toronto: how would the Vacant Home Tax treat the old house if it is empty for part of the year while it is for sale.

Three questions that settle the order

1. How flexible is the destination? If several buildings or streets would suit you, sell first. If only one will do, buying first deserves a closer look.
2. Does the purchase depend on the sale money? If it does, sell first.
3. What would six extra months of carrying the old house cost, including property tax and possible Vacant Home Tax? If that number is uncomfortable, it answers the question.

Before you decide, read our post on how long downsizing takes in Toronto and our breakdown of Toronto downsizing costs. Nothing here is legal, tax or financial advice, so confirm your situation with your lawyer and mortgage professional. When you want to talk through the order for your own move, contact us.