Cash Back at Closing

[Account Closed]

I have heard that in Canada, banks are not usually comfortable with deals that include cash back at closing.

I can not figure out why. In my opinion, the banks should really only care if they are financing more than 80% of the property value and not where the 20% down payment actually came from. I have not approached any lenders yet regarding this issue, just looking to expand my knowledge on the topic if it does come up.

I would expect that there would be little difference to a seller between taking a certain amount off the asking price and giving that same amount in cash at closing as an adjustment. It would however make a big difference to the buyer.

I understand that this may affect capital gains taxes the seller could be on the hook for but this would just be part of the deal they would have to consider.

Thanks in advance to anyone that has any input.

Cheers