Closing Costs When Selling and Buying A House In Toronto


Housing prices in Toronto is certainly not cheap, and even buying a single detached house can cost you above $1 million. 

When buying a new house, one of the biggest concerns for any home buyers is the hefty closing costs, which can significantly add more to the already expensive property prices.

Here, we will discuss the key elements included in closing costs, so you can plan ahead before making the purchase. For house sellers, this information can also be useful in your negotiation.

Costs Required Before Closing

It’s important to note that there are some fees that would need to be paid before the closing. Knowing these expenses are important so you can plan it ahead on your budget.


Typically you will need to pay around 5% of the house’s value. This will not be an additional cost, as it will be deducted from the house’s price. However, since you’ll need to pay it within 24-hours of the accepted offer, it’s best to plan ahead. 

Home Appraisal

Home—or property— appraisal is an inspection by a professional home appraiser to give a professional opinion about the value of the property. This information is required by the mortgage lender to assess whether the house’s price is fair, to give an informed decision whether or not they can provide the buyer with the lending. 

Typically a professional property appraiser will cost around $300 to $500, but is generally covered by the mortgage lender. Sometimes, however, this fee is covered by the homebuyer.

Home Inspection

While appraisal is about the house’s value, inspection is about checking the physical aspect of the house (structure, utility system, etc.) to see whether there are any issues before the purchase is made. The fee of a home inspection company is usually around $500-$700, and covered by the buyer. 

It’s usually not mandatory, but it’s important not to skip the inspection process since future issues like poor water quality or damaged foundations can cost you more.

Closing Costs During The Closing Process

Land Transfer Tax

Land transfer tax is often the most significant costs that is the responsibility of the buyer. In some cases, the total expense can be more than 5% of the purchase price—essentially increasing the house’s price by 5%. 

Usually, land transfer tax only affects resale houses, but there are also cases that the buyer is obliged to pay land transfer tax during the purchase of a new building. The amount of the tax will vary depending on location, and in the case of Toronto, you’ll need to pay a certain percentage to Toronto (municipal) and another amount to Ontario (province).

At the moment, here are the rates for land transfer tax in Toronto and Ontario:

Land Transfer Tax Rates for Ontario

Below and including $55,000=0.5%

$55,000.01 to $250,000.00=1.0%

$250,000.01 to $368,333=1.5%

$368,334 to $400,000.00=1.5%

$400,000.00 to $2,000,000.00=2.0%

Above $2,000,000.00=2.5%

Land Transfer Tax Rates for Toronto 

Below and including $55,000=0.5%

$55,000.01 to $250,000.00=1.0%

$250,000.01 to $400,000.00=1.5%

$400,000.00 to $2,000,000.00=2.0%

Above $2,000,000.00=2.5%

Meaning, if you are going to purchase a house worth $1,200,000, the calculation is:

The first $55,000 is subjected to 0.5% tax=$275

Between $55,000 up to $250,000=$195,000, subjected to 1% tax= $1,950

$250,000-$368,333 then $400,000 subjected to 1.5% = 150,000=$2,250

The rest up to $2,000,000= $800,000 subjected to 2%=$16,000

Total: $20,475 for both municipal and provincial tax, so the total is $40,950.

As you can see, the calculation is fairly complex, but a quick Google search for “Toronto land transfer tax calculator” will show various sites to help you calculate this.

While land transfer tax costs can be very significant, Canadian first-time home buyer can reduce this cost in various tax rebates

Lawyer fees for property transaction will range between $500-$1,500 depending on the lawyer and how much the property price is. This fee will get you:

  • The necessary paperwork to obtain a mortgage
  • Title search and title insurance
  • Verifying the paperwork of the seller

Legal fees are important (and generally mandatory) expenses so you can avoid various legal issues in the future.

Title insurance might not be included in your legal fees, and will cost around $250-$400.

Realtor Fees

The home buyer might or might not hire a realtor, but usually the seller’s realtor cost is included in the asking price. This can amount to around 5% of the total closing costs (not the property price).

Land Survey

Not a mandatory cost. In general, it’s only required by the lender when the seller cannot give you a recent, updated survey, and can be replaced with a title insurance (discussed above). The cost can range between $1,000 and $2,000, and might be handled by the seller, the buyer, or split between the two depending on your agreement. 

CMHC Insurance (Mortgage Default Insurance)

If you pay less than 20% on mortgage down payment, a CMHC insurance is required, and typically will range between 0.6% to 6.5% of the amount you borrow (you might check for the rates here. So, it can be quite significant. 

You do have the option to include it to your monthly mortgage payments (so you wouldn’t need to pay it at once during the closing), but this will subject you to more interests. Generally, the closer your down payment is to the 20% mark, the less you’ll need to pay in insurance. 

Tarion Warranty Fees and Harmonized Sales Tax (HST)

These fees are generally only applicable if you are purchasing a newly constructed house or condo. You might want to check the rates here. 

End Words

Closing costs associated with buying a property can be quite significant, and in total can add around 10% of the house’s value—depending on the property price—. It’s important to know the required expenses to help with your negotiation, and also to plan your budget ahead to avoid future problems. 

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