Closing Costs in Ontario
Closing costs are the cash expenses due on top of your down payment when a purchase completes — land transfer tax, legal fees, title insurance, adjustments, and more. In the GTA, budget roughly 1.5%–4% of the purchase price (the top of that range inside Toronto, where municipal land transfer tax applies). They cannot be added to your mortgage.
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Key Takeaways
- Budget 1.5%–4% of the price in cash for closing — land transfer tax dominates, and Toronto purchases sit at the top of the range.
- Closing costs cannot be mortgaged; they're due in certified funds through your lawyer on closing day.
- Sellers' sleeper cost is the mortgage penalty — on fixed mortgages the IRD can reach five figures; get a payout statement before listing.
- Pre-construction closings carry builder adjustments that resale closings don't — cap development charges in the agreement while you can.
The Buyer's List, Itemized
Land transfer tax — the big one: ~$16,475 provincial on a $1M purchase, doubled inside Toronto. First-time buyers rebate up to $4,000 (ON) + $4,475 (Toronto).
Legal fees and disbursements — typically $1,500–$2,500 for a straightforward purchase, including title searches and registrations.
Title insurance — usually $400–$900 one-time, protecting against title defects, fraud, and survey issues; effectively standard because lenders require it.
Adjustments — you reimburse the seller for prepaid property taxes, utilities, or condo fees covering days after closing. On new construction, builder adjustments (development charge caps, meter installations, Tarion enrolment) can run to five figures — this is where lawyers earn their fee on pre-construction files.
PST on CMHC premium — if your mortgage is insured, Ontario's 8% sales tax on the premium is due in cash.
Inspection, appraisal, and moving costs — inspection $400–$700; appraisal often lender-paid but sometimes yours ($300–$500); movers, elevator deposits (condos), utility hookups.
Rule of thumb: a $1M resale purchase outside Toronto needs roughly $20,000–$25,000 of closing cash; inside Toronto, $36,000–$42,000.
The Seller's Closing Costs
Sellers don't pay land transfer tax, but they do pay:
Real estate commission plus HST — the largest line; negotiable and set out in the listing agreement.
Legal fees — usually $1,200–$2,000 for a sale.
Mortgage discharge or penalty — the sleeper cost. Discharging a mortgage mid-term triggers a penalty: commonly three months' interest on variable mortgages, and the GREATER of three months' interest or the interest rate differential (IRD) on fixed mortgages. IRD penalties on big-bank fixed mortgages broken early can reach tens of thousands of dollars — get the payout statement BEFORE you list, not during the conditional period.
Adjustments and utilities — final bills, and credits for anything prepaid past closing.
Sellers who are also buying should model both sides' costs together — sale proceeds arrive net of all of the above, which changes the down payment available for the purchase.
How to Budget So Closing Day Is Boring
- Separate the buckets early: down payment, closing costs, and a post-closing reserve. Draining the closing-cost bucket to enlarge the down payment is how buyers end up borrowing on credit cards in month one.
- Get a lawyer's estimate up front. Any good real estate lawyer will quote fees plus estimated disbursements, LTT, and title insurance for your specific price and city in one email.
- On pre-construction, cap what can be capped. Development charges and certain levies can be capped in the builder agreement during your 10-day review — uncapped, they're an open-ended closing cost years in the future.
- Confirm how funds must arrive. Lawyers require certified funds or wires, with fraud-prevention verification steps — a same-day e-transfer limit is not a closing plan.
Your agent should hand you a written closing-cost estimate alongside any offer strategy; if the first time you hear about land transfer tax is from your lawyer's trust letter, the process failed you.
Frequently Asked Questions
Are closing costs different for a condo?+
The structure is the same, plus condo-specific items: a status certificate review on the way in, common-expense adjustments at closing, and building move-in fees or elevator deposits ($100–$500, sometimes refundable). Maintenance fees themselves are a carrying cost, not a closing cost — but your lender counts 50% of them in qualification.
What is title insurance and do I really need it?+
A one-time policy protecting against title defects, survey and zoning issues, unpaid liens, and increasingly title fraud. Lenders effectively require it, and owner coverage typically costs little more when purchased together. For the $400–$900 it costs on most GTA homes, no lawyer we work with recommends skipping it.
Do I pay HST when buying a home in Ontario?+
Resale homes: no HST on the price (you'll pay HST on services like legal fees, commission, and inspection). New construction: HST applies but is typically embedded in the advertised price with rebates assigned to the builder — provided you occupy as your principal residence. Investors buying new construction must often pay the rebate portion at closing and claim the rental rebate back — a five-figure cash-flow surprise if unplanned.
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