Property Tax Adjustments on Closing in Ontario: Who Pays What

If you are buying or selling a home in Ontario, your lawyer will probably mention a "statement of adjustments" in the days before closing. One of the biggest lines on it is usually property tax. You may have paid taxes ahead of time as a seller, or the bill may still be unpaid when the buyer takes over.

This article explains in plain words what a property tax adjustment is, where the rules come from, what else sits on the same statement, and what to check before closing day. Your own agreement and your own tax bill decide the actual numbers, so treat this as a guide to the idea.

What a property tax adjustment is

Property tax is billed to a property over a period of time, but ownership changes on a single day. The seller may have paid taxes for months that the buyer will now own the home, or the seller may have used the home for months of a bill that has not been paid yet. How that cost is shared between you is generally set by the wording of your agreement of purchase and sale, so it is worth confirming with a lawyer.

Property tax adjustments are one of the items the Financial Consumer Agency of Canada lists among a buyer's closing costs. For sellers, preparing the statement of adjustments is part of the legal work on a sale.

In plain terms, the statement shows a credit for one side and a debit for the other on the tax line. Which way it goes, and by how much, depends on your agreement of purchase and sale and on the billing and payment situation on your closing date. How this applies to you is worth confirming with a lawyer.

Where the rules come from

There is no one section of a statute that lays out how every adjustment is made. In most resale transactions the details come from the agreement of purchase and sale, often the standard form used by realtors. That agreement sets the closing date and tells the lawyers how to treat taxes, utilities and similar items.

That is why two deals that look alike can have slightly different statements. Special terms you or your realtor added, such as a credit for work or an unusual closing date, can change the numbers. Read the adjustment clause and any schedules before you rely on a general rule of thumb.

What else is on the statement of adjustments

Property tax rarely stands alone. Other items commonly appear on the same statement, and it helps to know what to look for.

• Property tax, showing what has been paid, what is owing and how the closing-day split works.
• Utilities and similar items that are shared up to closing, depending on your agreement.
• Credit for the deposit the buyer already paid.
• On a new home, the Tarion enrolment fee, which the builder owes but may pass to the buyer through the statement of adjustments. From September 1, 2025 the schedule includes a $55-per-home adjustment, the average fee is $1,790, and there is no change for homes priced at $550,000 or below.
• Other builder charges, such as development charges or utility hook-ups, which depend on the agreement of purchase and sale and the Tarion Addendum.

For a new home, whether the builder can charge you these items is a contract question, so have the agreement reviewed before you sign it, not just before closing.

Adjustments are not the same as land transfer tax

People sometimes mix up two very different taxes. A property tax adjustment shares the municipal tax bill between seller and buyer. Land transfer tax is a provincial tax calculated in brackets on the value of the consideration. It is payable on every conveyance of land tendered for registration, so it is paid when the transfer is registered on closing or before then.

Land transfer tax is calculated on the value of the consideration, which includes the purchase price, liabilities assumed, benefits conferred, soft costs and the cost of upgrades, but not HST paid on the purchase price. Toronto has its own municipal land transfer tax on top of the provincial one, so Toronto buyers need to ask about it separately.

Budget for all of these together. The Financial Consumer Agency of Canada suggests buyers set aside 1.5% to 4% of the purchase price for closing costs.

What to do next

• Keep your most recent property tax bill and any proof of payment, and give copies to your lawyer.
• Ask your lawyer for a draft statement of adjustments a few days before closing, not on closing day.
• Compare the closing date used in the draft to the date in your agreement.
• Check that the deposit credit and any special terms from the agreement are on the statement.
• Ask about any item you do not understand, and about whether any tax is still unpaid for a period before closing.
• If you are buying a new home, ask which builder charges will be added to your side of the statement.

A lawyer can confirm how your agreement treats taxes and whether your numbers look right.

Frequently asked questions