How Much Are Closing Costs in Ontario for Buyers and Sellers?

People often ask for one number: how much cash do I need on closing, or how much will come off my sale? The honest answer is that closing costs are a mix of a formula-based tax, negotiated fees and items specific to your mortgage and property.

This article gives you the one piece that can be calculated exactly, provincial land transfer tax by bracket, then explains what else is added for buyers and sellers and what moves the total.

Buyers: land transfer tax is the biggest fixed item

For agreements after November 14, 2016, Ontario's provincial land transfer tax is 0.5% up to $55,000, 1.0% from $55,000 to $250,000, 1.5% from $250,000 to $400,000, and 2.0% above $400,000. A further 2.5% applies to the portion above $2,000,000 where the land has one or two single-family residences. The buyer pays when the conveyance is tendered for registration, which means on closing through the buyer's lawyer.

You can work out your own figure by applying each rate only to the slice of the price that falls inside that bracket. The brackets look like this:

If the property is in Toronto, the city has its own municipal land transfer tax on top of this, so ask your lawyer to calculate both. Non-resident buyers may face additional taxes that vary by buyer.

First-time buyer refund

An eligible first-time buyer can receive a refund of up to $4,000, which effectively means no provincial tax on the first $368,000 of an eligible home. You must be at least 18, occupy the home as your principal residence within nine months, never have owned an eligible home anywhere in the world (nor a spouse while married), and, for agreements after November 14, 2016, be a Canadian citizen or permanent resident. A claim must be made within 18 months of registration.

To estimate your net tax, calculate the tax from the brackets and then subtract any refund you qualify for. Your lawyer can confirm whether you are eligible.

Other buyer and seller items

Beyond land transfer tax, the costs on each side are mostly negotiated or depend on the file. Buyers should expect legal fees and disbursements, and may choose title insurance, which is available through a lawyer, a title insurance company or an agent or broker. A condominium buyer may also pay a status certificate fee, which cannot exceed $100 including taxes.

Sellers pay no land transfer tax. Their costs are commission, HST on commission, legal fees and disbursements, mortgage payout or penalty, and adjustments. HST at 13% applies to those taxable services but not to the resale price of a typical used home.

• Buyers: land transfer tax, legal fees, optional title insurance, status certificate for a condominium, and adjustments.
• Sellers: commission plus HST, legal fees plus HST, mortgage payout or penalty, and adjustments.
• Both sides: small registry copy fees, such as $36.50 for a parcel register copy.

Why there is no single percentage for sellers

A seller's total is driven mainly by two numbers you control or can look up: the commission in your listing agreement and your mortgage payout. Commission is negotiated, so the percentage depends on your agreement. A prepayment penalty is usually the higher of three months' interest or the interest rate differential, and the Financial Consumer Agency of Canada's example shows a $12,000 penalty on a $200,000 balance. That one line can dwarf the legal fees.

Commonly quoted overall ranges you may see online are not set by law, so treat them as rough guesses and build your own estimate from written quotes.

What moves the total, and what to do next

• Price: land transfer tax rises by 2.0% on each dollar above $400,000.
• First-time buyer status: eligibility could lower the tax by up to $4,000.
• Location: Toronto adds a municipal tax, and non-resident rules can add more.
• Mortgage terms: a penalty can be sizable, and porting may help if you are buying again.
• Property type: condominiums, tenanted homes and estates bring extra items.

• Calculate provincial land transfer tax from the brackets and subtract any refund you qualify for.
• Ask your lawyer for a written estimate of all buyer or seller costs, with HST.
• Ask your lender for a payout statement or confirm porting.
• Keep a cash buffer, since land transfer tax is due on closing.

Frequently asked questions