Scenario: You sold for more than you paid — but the payout number is smaller than expected. You’re both asking the same question: “Where did the money go, and how do we split what’s left?”
Step 1: separate “sale price” from “net proceeds”
Sale price is what the buyer paid. Net proceeds is what remains after paying everyone who gets paid at closing.
Most misunderstandings happen because people talk about the sale price like it’s the payout. It isn’t.
Step 2: what gets paid first (the usual order)
Closing is basically a waterfall. The sale price comes in, then it flows out to obligations and costs.
- Mortgage balance: the lender gets paid off first.
- Mortgage penalty or discharge fees: if you break early or need discharge paperwork (varies by lender and term).
- Realtor fees: if you used an agent.
- Legal fees / notary fees: for the sale closing (and title work).
- Closing adjustments: property tax adjustments, utilities, condo/strata adjustments, etc.
- Other secured debts: e.g., a HELOC registered on title, if applicable.
Step 3: a simple example (so the math feels real)
Imagine:
- Sale price: $900,000
- Mortgage balance: $560,000
- Fees + adjustments (rough total): $45,000
Net proceeds are approximately:
$900,000 − $560,000 − $45,000 = $295,000
That $295,000 is the pool you’re actually splitting.
Step 4: how you split what’s left
There are three common “rules.” The right one is the one you both agreed to (or can calmly agree to now).
Rule A: split by title percentage (e.g., 50/50)
If you’re on title 50/50 and you’ve treated the home like a true joint asset, this is the cleanest split.
Using the example above: $295,000 net proceeds → $147,500 each.
Rule B: return down payments first, then split the remainder
This is common when one person contributed more cash up front, but you shared ongoing costs as a household.
Example: Alex put $120,000 down, Sam put $30,000 down (total $150,000). If net proceeds are $295,000:
- Return deposits: Alex $120,000, Sam $30,000 → $145,000 remaining
- Split remaining 50/50: $72,500 each
Final: Alex $192,500; Sam $102,500.
Rule C: contribution-based (treat equity like a ledger)
Some co-owners split based on documented contributions: down payments, mortgage principal, and agreed value-adding renovations. (Many people treat interest, property taxes, and “cost of living” differently.)
This can feel fair when contributions were uneven over time — but it only works if you have records and a shared definition of what counts.
What to decide (before you argue about numbers)
Two people can do the same math and get different answers if they’re using different assumptions. Decide these explicitly:
- Which split rule applies: title %, return deposits first, or contribution-based.
- Which costs are included: realtor fees, legal fees, mortgage penalty, staging, repairs, etc.
- How to treat upgrades/renovations: required maintenance vs. optional upgrades.
- Whether anyone lived there alone: does occupancy create rent/credits, or no change?
Taxes (quick reality check)
If the property is not your principal residence (or has mixed use), there may be tax implications. Don’t guess—ask a qualified professional if this applies to you.
Practical takeaways
- Net proceeds are the real number: don’t split the sale price; split what’s left after closing costs.
- Agree on the rule first: title %, deposits-first, or contribution-based.
- Make assumptions explicit: especially renovations, penalties, and “who lived there.”
- Write it down: a one-page summary prevents “I thought…” fights later.
If you want to go deeper
For exit decisions, read What happens if one person wants to sell? and How buyouts usually work in shared homes.
For buyout math, see How to calculate a fair buyout.
Note: This guide is educational and not legal or tax advice. Rules, costs, and tax treatment can vary by province and situation.