What Does It Cost to Sell Your Home in Ontario? A Seller's Closing Cost Guide

Most sellers mentally subtract the realtor commission from the sale price and assume that is their cost. The number that hits their bank account on closing day is usually lower than expected. Seller closing costs in Ontario involve several moving parts beyond commission: your real estate lawyer's fees, mortgage discharge costs, adjustments owed to the buyer, and — in some cases — capital gains or HST exposure. Knowing these numbers before you list helps you price realistically and avoids a shock at the end.

Commission Is the Biggest Number — but It Is Not the Only One

Seller closing costs typically fall into these buckets:

1. Real estate commission (if you used an agent)
2. Legal fees and disbursements (mandatory; you need a lawyer)
3. Mortgage discharge costs (if you have an existing mortgage)
4. Statement of adjustments credits to the buyer
5. Capital gains tax (if the property is not your principal residence)
6. HST on commission (yes, you pay HST on the realtor fee)

Let's walk through each.

Your Real Estate Lawyer's Role — and Cost

Ontario law requires a licensed lawyer to complete any real estate transaction. Your selling lawyer will:

• Confirm title is clear of liens and encumbrances the buyer did not agree to assume
• Prepare the deed (Transfer/Deed of Land) and closing documents
• Receive funds from the buyer's lawyer and pay out your mortgage
• Calculate the net proceeds and send you the balance
• Report to you after closing

Legal fees for sellers are typically lower than for buyers because there is less search and registration work on the seller side. Treadstone Law charges flat fees — visit our pricing page for current seller-side rates.

Seller disbursements are modest but real. They can include:

• Execution searches (confirming no outstanding judgments against you)
• Courier or wire fees for discharging the mortgage
• Document registration costs if applicable

Mortgage Discharge: Often the Biggest Surprise

If you have a mortgage, it must be paid out and discharged on or before closing day. You will owe:

• Outstanding principal (your remaining balance)
• Any prepayment penalty — most fixed-rate mortgages charge a penalty for early payout; variable-rate mortgages typically charge three months' interest. Contact your lender well before listing to get an exact payout figure. Penalties can be substantial on large balances.
• Discharge registration fee — a modest provincial fee for removing the mortgage from title
• Lender's discharge administration fee — many lenders charge a fee (as of writing, typical amounts vary by institution; verify with your lender)

Ask your lender for a payout statement as soon as you have a firm closing date so your lawyer can confirm funds on closing day.

Statement of Adjustments: What You Credit the Buyer

The statement of adjustments is a reconciliation prepared by your lawyer showing credits and debits between you and the buyer as of closing day. As a seller, you will typically credit the buyer for:

• Property taxes for the period after closing — if taxes are paid in arrears (which is common in Ontario), you owe the buyer a credit covering your time of ownership in the current billing period
• Prepaid utilities — uncommon in residential sales but possible
• Any agreed-upon credits — for example, if you agreed to leave appliances and the buyer agreed to a credit instead

These adjustments reduce your net proceeds.

Capital Gains: The Tax Nobody Wants to Talk About

If the property you are selling was your principal residence for every year you owned it, the gain is generally sheltered by the principal residence exemption (PRE) and no capital gains tax is owed. The PRE is extremely valuable — protect it.

However, if the property is a:

• Rental property
• Vacation/cottage property
• Property you lived in for only part of your ownership period
• Property that attracted HST when you built or substantially renovated it

…then you likely have a capital gains or income tax exposure. The applicable tax is calculated on your tax return for the year of sale. Consult a tax professional (lawyer or accountant) before closing, not after.

Does HST Apply to Your Sale?

Resale residential homes: generally exempt from HST.

New construction / substantially renovated homes sold by a builder: HST applies.

Assignment sales of pre-construction units: complex HST rules apply; get legal and tax advice before signing an assignment.

Rental property sales: HST treatment depends on the type of property and whether you were registered for HST. Get advice before proceeding.

Quick Estimate: Seller's Net Proceeds Calculation

To estimate your proceeds:

``` Sale price – Real estate commission (+ HST on commission) – Mortgage payout (principal + penalty + discharge fee) – Legal fees and disbursements – Property tax adjustment (credit to buyer) – Any other negotiated credits = Estimated net proceeds (before income tax) ```

Your lawyer will prepare the precise calculation from the final numbers.

Frequently asked questions