HST on Real Estate Commission and Legal Fees When Selling in Ontario

You have accepted an offer, the deal looks good, and then the commission statement or lawyer's account arrives with a line for HST. It can feel like a surprise, especially if you have heard that selling your own home does not attract HST.

Both things are true. The house itself is usually not taxed, but the services you buy to sell it generally are. This article explains where HST applies on a typical Ontario resale, where it does not, and what other costs sellers tend to see.

The sale price and the services are treated differently

Sales of used, owner-occupied homes by individuals are usually exempt from GST/HST, and only homes sold by builders are taxable. That means no HST is charged on the sale price of a typical resale.

The services connected with the sale are a separate matter. Ontario's HST rate is 13%, and it applies to taxable services connected with a sale, such as real estate commissions and legal fees, but not to the resale price of a used home. So you can owe HST on your agent's commission and on your lawyer's fees even though nobody adds HST to the price the buyer pays you.

A simple way to picture it: the exemption belongs to the house, not to the people who help you sell it. Each professional charging you for a service is looking at their own fee, not at the sale price.

What HST applies to on a typical sale

Commission is a negotiated arrangement between you and your brokerage, so the amount depends on your listing agreement. Read it before you sign so you know whether the percentage quoted is before or after HST. Your lawyer's account will show the fee, the disbursements and the HST on the taxable parts separately.

Other costs a seller usually sees

Land transfer tax is a buyer's cost. It is the person who tenders the conveyance for registration who pays it, and a seller does not pay land transfer tax on a sale. The costs that fall on the seller instead are commission, HST on commission, legal fees and disbursements, any mortgage payout or penalty, and adjustments.

Disbursements are out-of-pocket costs your lawyer pays on your behalf. Land registry copies are one example. Since November 3, 2025, a copy of a parcel register including the first page costs $36.50 in total, and each additional page is $2.56. Your lawyer may need documents like these when preparing the sale, and the account should show what was actually incurred.

• Commission and the HST on it, as set out in your listing agreement.
• Legal fees, disbursements and HST on the taxable portion.
• Mortgage payout, which can include a prepayment penalty.
• Adjustments, such as property taxes and utilities, settled between you and the buyer on closing.

Mortgage payout is not HST, but it can surprise you too

Many sellers are caught off guard by a different line on the statement of adjustments. Paying off an entire mortgage early, including because you sell the home, can trigger a prepayment penalty. Porting the mortgage to a new home is only an option if you are buying another home, and your lender should be asked about it.

A prepayment penalty is usually the higher of three months' interest on what you still owe or the interest rate differential. As an illustration, on $200,000 at 6% with 36 months left and a posted rate of 4%, three months' interest is $3,000 while the interest rate differential is $12,000, so the penalty would be $12,000, plus possibly an administration fee.

Whether the Mortgages Act or Interest Act gives you a right to pay out without a penalty depends on your mortgage. Under the Interest Act, a borrower with a mortgage that is not payable until more than five years after its date may, after five years, pay what is owing plus three months' interest, and no further interest is chargeable. That rule excludes mortgages given by corporations and prescribed entities. For a typical shorter term, the contract usually governs, so check your mortgage documents.

Reporting the sale to the CRA

Having no HST on the price does not mean you can skip reporting. Since the 2016 tax year, you designate the home as your principal residence on Schedule 3 of your T1 return, and for sales from 2017 you also complete Form T2091. For a deceased person's estate the form is T1255, and trusts use T1079 with the T3 return.

Missing the designation has a cost. The late designation penalty is the lesser of $8,000 or $100 per complete month from the original due date. If part of the property was used for something other than a home, such as a business, the tax treatment can differ. A home that is mostly non-residential is treated as two properties. If you ran a business from the property or claimed input tax credits on it, speak to an accountant before closing. Sellers who claimed input tax credits on the purchase or improvements are one of the exceptions to the usual exemption.

What to do next

• Ask your brokerage whether the commission percentage in the listing agreement includes or excludes HST.
• Ask your lawyer for an estimate that shows fees, disbursements and HST separately.
• Request a mortgage payout statement from your lender, and ask about any prepayment penalty.
• Gather records of any business use of the home or past input tax credit claims, and raise them with your lawyer or accountant.
• Diarize the principal residence reporting on your next T1 return.

If your situation is out of the ordinary, such as a home with a business area, a sale by an estate or a home you built or substantially renovated, a lawyer or accountant can confirm how the exemption applies to you.

Frequently asked questions