Selling a home in Ontario costs money—and most sellers don’t know how much until closing day. Here’s what you’ll actually pay, broken down line by line.
Real Estate Commission
Real estate commission is your largest closing cost. In Ontario, sellers pay commission to their listing agent’s brokerage, which is then split with the buyer’s agent’s brokerage. The standard is 4–5% of the sale price, though this varies by agent and brokerage.
Commission is negotiable. Some agents work at 3.5%, others at 5%. Always discuss this before listing. According to Ontario MLS’s market data, the Greater Toronto Area remains highly competitive, which can affect commission rates based on market conditions.
- Typical split: 2.5% to listing brokerage + 2.5% to buyer’s brokerage = 5% total
- On an $800K sale at 5%: $40,000 in commission
- On an $800K sale at 4%: $32,000 in commission
Commission is deducted from your sale proceeds before you receive payment. It is the single largest closing cost for most Ontario sellers.
Legal Fees
You need a lawyer to handle title transfer, discharge of mortgage, and closing paperwork. In Ontario, typical seller legal fees range from $800 to $1,500, depending on complexity and the lawyer’s location.
What’s included in legal fees:
- Title search and title insurance
- Preparation of deed
- Review of purchase agreement
- Mortgage discharge coordination
- Closing statement preparation
- Handling of funds and tax documentation
If your property is straightforward (no liens, no complications), you’ll be at the lower end. If there are title issues, outstanding property tax, or condo liens, costs increase. Get a quote from your lawyer upfront—don’t assume the cost.
Mortgage Discharge Fees
Standard Discharge (No Penalty)
If your mortgage has matured (you’re past the term end date), discharge is free from your lender. Your lawyer coordinates this with your bank. The only cost is your lawyer’s fee, already included in legal fees above.
Breaking Your Mortgage Early (Penalty)
If you’re selling before your mortgage term ends, your lender charges a penalty. This is not a closing cost you control—it’s a cost deducted from your sale proceeds by your lender.
There are two types of penalties:
- Interest Rate Differential (IRD): The difference between your mortgage rate and the lender’s current rate, multiplied by the remaining term. This is typically larger when rates have dropped.
- Three Months’ Interest: A flat fee equal to three months of your mortgage interest payments. Lenders usually let you choose the lower of the two.
Example: If your mortgage balance is $400,000 at 4.5% and you’re breaking it 18 months early, your penalty could range from $4,500 (three months interest) to $12,000+ (IRD), depending on current rates and your lender’s policy.
Always ask your lender for a payout statement before listing to know your exact penalty. This number affects your net proceeds.
HST on Real Estate Commission
Ontario charges 13% HST on real estate commissions. This is a significant line item most sellers overlook.
How it works: The 5% commission is subject to HST, so the true cost is 5% × 1.13 = 5.65% of the sale price.
- On an $800K sale at 5% commission:
- Commission: $40,000
- HST (13%): $5,200
- Total commission + HST: $45,200
HST is included in the total commission deducted at closing. Your lawyer’s statement of account will itemize this separately so you can see exactly what you’re paying.
Other Possible Closing Costs
Property Taxes
Property taxes are prorated between buyer and seller at closing. If you’ve prepaid taxes for the year, you’ll receive a credit. If taxes are owing, you’ll pay a debit. This is a wash for most sellers—not an out-of-pocket cost, but a settlement adjustment.
Condo Fees and Utilities
Like property taxes, condo fees and utilities are prorated. Adjustments are calculated at closing.
Home Inspection Repairs
If you agreed to pay for repairs in the purchase agreement, these are paid from closing proceeds. This is not a standard closing cost—it’s a negotiated obligation specific to your deal.
Title Insurance
Included in your lawyer’s fees in most cases. Confirm with your lawyer.
Recording Fees
Your lawyer pays these (~$30–$50) to register documents. Included in legal fees.
Worked Example: $800K Toronto Home Sale
Here’s what closing costs look like in a real scenario.
Assumptions:
- Sale price: $800,000
- Commission rate: 5% (split between brokerages)
- Mortgage balance: $400,000
- Mortgage rate: 4.5%, 18 months remaining on term
- No major complications
Closing Costs Breakdown:
| Item | Amount |
| Real estate commission (5%) | $40,000 |
| HST on commission (13%) | $5,200 |
| Legal fees | $1,200 |
| Mortgage discharge (no penalty, term ended) | $0 |
| Total Closing Costs | $46,400 |
Net Proceeds to You:
- Sale price: $800,000
- Less closing costs: ($46,400)
- Less mortgage payoff: ($400,000)
- Net to you: $353,600
This assumes no property tax adjustments, no mortgage penalty, and no repair obligations. Your actual net will differ based on your specific situation.
Scenario with Early Mortgage Discharge:
If your mortgage term hasn’t ended and rates have dropped 1.5% since you signed, your IRD penalty might be $8,000–$12,000. In this case:
- Total closing costs: $46,400
- Mortgage discharge penalty: $10,000
- Total costs deducted: $56,400
- Net to you: $343,600
That $10,000 penalty makes a real difference. Always factor this into your decision to sell before your mortgage term ends.
How to Lower Closing Costs
Negotiate commission: Commission is negotiable. Shop around and ask agents what rate they’ll accept. Even 0.5% off saves you $4,000 on an $800K sale.
Time your sale to avoid mortgage penalty: If your mortgage term is ending soon, wait until after the maturity date to sell, if possible. No penalty = $10,000+ in savings.
Shop legal fees: Get quotes from 2–3 lawyers. Some offer flat rates for straightforward sales.
Avoid title issues: Pay outstanding property taxes and resolve liens before listing. This prevents delays and legal complications that increase costs.
Summary: What Sellers in Ontario Actually Pay
On an $800,000 sale, closing costs typically total $45,000–$55,000 (5.6%–6.9% of sale price), including:
- Commission + HST: $45,200
- Legal fees: $800–$1,500
- Mortgage discharge: $0 (or $4,500–$15,000 if breaking term early)
The largest variable is your mortgage penalty, if any. Get a payout statement from your lender before making a selling decision.
For a precise estimate of your home’s sale price—and therefore your exact closing costs—use InstantCalculator.ca to find your home value in seconds. Then multiply by 0.056 to estimate total closing costs.
Frequently Asked Questions
Who pays closing costs in Ontario—buyer or seller?
Both. Sellers pay commission, legal fees, and mortgage discharge penalties. Buyers pay their own legal fees, property taxes (prorated portion), and mortgage default insurance (if applicable). These are separate obligations.
Can I negotiate the real estate commission?
Yes. Commission is not fixed. Shop around and ask agents what they’ll accept. Even 4.5% instead of 5% saves significant money on a large sale.
What if I break my mortgage early—how much will the penalty be?
Contact your lender for a payout statement. The penalty is either three months’ interest or the Interest Rate Differential (IRD), whichever is lower. In a rising-rate environment, three months’ interest is typically lower. In a falling-rate environment, IRD is higher. Get the exact number before listing.
Are closing costs tax-deductible?
No. Selling your primary residence is not a taxable event in Canada, and closing costs are not deductible. If you’re selling an investment property, consult an accountant about capital gains tax.
What’s included in my lawyer’s closing costs?
Title search, deed preparation, purchase agreement review, mortgage discharge coordination, closing statement, and fund transfers. Ask your lawyer upfront for a detailed fee quote to avoid surprises.
How much can I save by selling later in the year?
Timing doesn’t reduce closing costs—it only affects the sale price you’ll receive, which affects the commission amount. If selling in winter reduces your price by $50,000, you save $2,825 in commission + HST (at 5.65%). Only wait if your mortgage term is ending soon to avoid a discharge penalty.
Want a precise number for your specific address? Get a free instant home value estimate at InstantCalculator.ca. Enter your address and see what your home is worth in the current market—then multiply by 0.056 to estimate your closing costs.
 | Alex GoodmanSales Representative · RE/MAX Your Community Realty, Brokerage Alex Goodman is a Sales Representative with RE/MAX Your Community Realty, Brokerage, serving the Greater Toronto Area. He specializes in residential sales across Ontario — luxury, first-time buyer, and downsizing transactions — and maintains InstantCalculator.ca as a free public resource for Ontario homeowners researching their property value. |